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21 Sydney L. Rev. 5 (1999)
To Delegate or Not to Delegate: Board Committees and Corporate Performance in Australia's Top 100 Companies

handle is hein.journals/sydney21 and id is 15 raw text is: 'To Delegate or Not to Delegate '. Board Committees and Corporate Performance in Australia's Top 100 Companies NICOLE CALLEJA* Despite the fact that companies in Australia are not required by law to establish board committees, they are flourishing in the current corporate climate. Board committees have become important outward and visible signs of adherence to the principles of corporate governance; however, few studies have scrutinised their impact on corporate performance. The empirical findings outlined in this article suggest that the number and composition of board committees are linked to corporate performance. There is some evidence to support the proposition that particular committees should be made mandatory. For example, companies with audit, remuneration and nomination committees tend to perform better than companies without these types of board committees. 1. Introduction Section 226A of the Corporations LawI states that '... [tihe business of a company is to be managed by or under the direction of the directors.'2 However, in practice, this statement does not accord with reality. The business affairs of large listed companies are typically managed by the company's officers, not its directors.3 Boards meet infrequently and it has been observed that 'a fast-paced business world filled with complex choices does not permit management by a group such as the board, or the leisure of decision-making on an intermittent basis.'4 In actual fact, the way in which the board contributes to the management of its company is by governing to ensure the long term success of the company through supervision, review and policy making. In Australia, it has been acknowledged that 'many companies today are too big to be supervised and administered by a board of directors except in relation to matters of high policy.'5 Therefore, the role * BA, LLB (Hons), University of Melbourne; Solicitor, Arthur Robinson & Hedderwicks, Melbourne. An earlier draft of this article was submitted as part of the coursework for a Master of Laws degree in the Faculty of Law at the University of Melbourne. I am grateful to Professor John Farrar for his helpful comments on earlier drafts of this article. I Section 226A is a replaceable rule which is similar to the recently repealed Article 66(1) of Table A in Schedule I of the Corporations Law. 2 Corporations Law 1991 (Cth) s226A 3 Axworthy CS, 'Corporate Directors - Who Needs Them?' (1988) 51(3) Mod LR 273 at 273. 4 Branson DM, Corporate Governance (1993) at 229. 5 A WA Ltd v Daniels trading as Deloitte Haskins & Sells (1992) 7 ACSR 759 at 832.

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