A common and recurring theme in analyses of the causes of the Global Financial Crisis (‘GFC’) is the poor culture of corporations and financial institutions. It is unsurprising then, that in its aftermath, arguments that regulatory reform, absent a changed culture, will be ineffective gained momentum. The succession of corporate and banking scandals post-GFC, both globally and locally, suggests that corporations and banks have failed to address their cultural failings. Meanwhile, the perceived failure of regulators to hold to account wrongdoing corporations and directors, by not prosecuting them, has weakened public confidence and trust in the financial sector, regulators and political oversight. Indeed, trust in public institutions in Western liberal democracies is at an all-time low. Australia, up to the beginning of the COVID-19 crisis, has not been immune from this phenomenon as the Hayne Banking Royal Commission hearings have demonstrated. The focus of this article is on the role of ‘culture’ in corporations and the extent to which corporate culture can be used as a regulatory tool. It will contend that despite a wealth of scholarly work and commentary on ‘corporate culture’, efforts to use it as a legal mechanism in prosecutions and as a regulatory device to instil a superior culture in corporations remain problematic. This is not to say that recent initiatives that focus on culture as a key item of interest in the regulation of corporations, such as embedding Australian Securities and Investments Commission specialist staff in the major Australian banks are not important; only that it is unlikely that we will see public confidence and trust in corporations and regulators being restored any time soon.
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