An independent report by University of Newcastle Associate Professor Jim Psaros, has found more than 40 per cent of Australia's medium-sized listed companies have inadequate corporate governance standards.

The report is based on 2006 annual report disclosures and examines the performance of the 150 biggest mid-sized companies listed on the Australian Stock Exchange.

Thirteen companies achieved the lowest possible score of one star on a scale of 0-5 stars. Thirty two per cent achieved only a two star rating based on key governance factors such as board composition and auditor independence.

The report found that less than 50 per cent of companies surveyed have an independent chairman, and only 25 per cent have a majority of independent directors.

Associate Professor Psaros, from the University's School of Business and Management, said the results showed a shift away from the improvements in corporate governance that was evident over the six years the report has been published.

"I think there may be a hint of complacency creeping in and I fear that with the economy booming, particularly in the mining sector, governance issues are not seen as such a concern at the moment," he said.

Associate Professor Psaros' findings are contained in the 2007 BDO Kendalls Mid-Cap Governance report, released this week.