Purpose – This paper aims to examine how directors operationalise Australian corporate governance guidelines to follow their self-regulatory responsibilities.

Design/methodology/approach – This study consists of semi-structured, in-depth interviews with 41 directors of ASX200 companies.

Findings – This study sheds light on how directors behave when grappling with the challenges they face as they work within a non-mandatory governance code. It adds to the literature by finding that while most of the good practice guidelines detailed by the ASXCG are well understood and enacted, in practice directors focus on ensuring strong relationships, minimising risk and managing the tensions they face in responsibly managing remuneration.

Practical implications – This study highlights the three R’s and the workings of the code, it also reveals the dynamics of managing uncertainty at the board level. At the implementation level, these insights will help board members to reflect on where attention is focused within guiding principles.

Originality/value – This study contributes to corporate governance studies by filling the gap between what should happen – as per governance guidelines – and what does happen in practice in top level Australian corporations. In making visible what exercises directors most as they operationalise their responsibilities in Australia, a country with a non-mandatory ‘‘if not, why not’’ governance code, the authors demonstrate how self-regulation plays out.

Corporate governance has attracted significant focus both in both Australia and other countries, particularly in light of large corporate collapses over recent decades. With an increase in the focus on corporate governance, many countries have adopted voluntary codes of corporate governance and require corporations to explain deviations from best practice (‘comply or explain’).
The Australian Securities Exchange Corporate Governance Council (ASXCGC) was formed in August 2002, and released a set of best practice governance principles in 2003 containing the ‘if not, why not’ (comply or explain) provision. The best practice principles and recommendations are extensive, with the current (3rd) version containing eight principles and 29 recommendations. However, in spite of over a decade of use, it is not currently understood how company directors make sense of and enact the 29 recommendations.
The effective practice of corporate governance of Australian Securities Exchange (ASX) top 200 companies (ASX200) is critical to the reputation and conduct of wealth and prosperity in the Australian economy. This thesis studies the ways in which ASX200 directors describe the practice of governance against the ASXCGC Principles and Recommendations. It highlights the dominant and the normalised factors for directors in the practice of the principles and recommendations and proposes an interpretative model of practice to assist directors to hone their governance practice. The model could also be useful for future and current company directors, governance practitioners and regulators of listed and unlisted companies in Australia.