Weak corporate governance and its flow-on effects
Weak governance never stays where it begins
The The Australian Financial Review reported yesterday that major fund managers are now wearing the financial consequences of write-downs. But the deeper lesson isn’t about the size of the impairment. It’s about how far governance failures travel once they escape the boardroom.
When governance breaks down inside a company, the damage never stays put. Weak governance is an external risk transfer mechanism. Control failures, soft oversight, and unreliable reporting don’t simply hurt the organisation that produced them, they migrate. They move up the chain. And eventually they land on the portfolios of fund managers who relied on information that should have been stronger.
And investors are left absorbing a risk they never priced in because the signals they were given were incomplete or overly optimistic.
This is why governance is not decorative. It is the first buffer that protects capital. When that buffer collapses, the impact flows outward, into fund performance, into client returns, and into the credibility of the market itself.
See my piece on Corporate Travel Management (CTM) AU/NZ here: https://lnkd.in/gApjNGSP