Identify and explain agency theory, stakeholder theory, legitimacy theory, and agency cost theories for the Article Article: Linden, Andrew, The CPA saga demonstrates why Australia’s corporate governance code needs replacing. The Conversation (online). 21/6/17, np. The ongoing saga involving CPA’s board of directors and CEO Alex Malley highlights the need for a new corporate governance code in Australia. The CPA, while not a publicly listed company, adheres to the ASX Code of Corporate Governance - in fact, the CPA assisted the Australian Stock Exchange (ASX) in writing its code. It is essential that the ASX code is replaced by a new code written by an independent body, in conjunction with stronger legislation. This will help combat future corporate governance scandals. While the ASX code only directly applies to commercial corporations listing on the exchange, its governance principles are used to benchmark best practices elsewhere. Community organizations, sports, schools, universities, professional bodies, and governments use or invoke the ASX code.

For example, non-listed organizations have used the ASX code to align executive remuneration with corporate peers. It has also been used to replace elected directors with non-executive independent directors - those with no direct links to either management or substantial shareholders.

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There are certain theories that explain business relationships and are used to understand and explain these relationships In particular the theories provide a means of understanding business challenge... View the full answer