Corp Gov in Asia

8/11/2019 Corp Gov in Asia

1/38Electronic copy available at: http://ssrn.com/abstract=1081954

WORKING PAPER

January 2008

School of Accounting

College of u!ine!! A"#ini!tration

$lori"a International %ni&er!ity''200 SW 8thStreet

(ia#i) $* ++',,

%SA

CORPORATE GOVERNANCE IN ASIA: EIGHT CASE STUDIES

Robert W. McGee

Florida Iteratioal Ui!er"it#

bob$%$&'ot(ail.co(

A)STRACT

Cor-orate go&ernance ha! recei&e" an increa!ing a#ount of attention in recent

year!. Cor-orate !can"al! ha&e /rought cor-orate go&ernance ea1ne!!e! to the

attention of the general -u/lic) e!-ecially in the %nite" State!. Wea1ne!!e! in thecor-orate !tructure of !o#e A!ian countrie! ha&e /een -artly /la#e" for !o#e

rece!!ion! that ha&e occurre" there.

hi! -a-er /egin! ith an o&er&ie of !o#e /a!ic cor-orate go&ernance-rinci-le! a! i"entifie" /y the OEC3) Worl" an1 an" I($) then -rocee"! toe4a#ine ho the!e -rinci-le! are /eing a--lie" in !electe" A!ian countrie!.

INTRODUCTION

Cor-orate go&ernance ha! /eco#e an i#-ortant to-ic in tran!ition econo#ie! in recent

year!. 3irector!) oner! an" cor-orate #anager! ha&e !tarte" to reali5e that there are /enefit!

that can accrue fro# ha&ing a goo" cor-orate go&ernance !tructure. Goo" cor-orate go&ernance

hel-! to increa!e !hare -rice an" #a1e! it ea!ier to o/tain ca-ital. International in&e!tor! are

he!itant to len" #oney or /uy !hare! in a cor-oration that "oe! not !u/!cri/e to goo" cor-orate
mailto:[email protected]:[email protected]


2/38Electronic copy available at: http://ssrn.com/abstract=1081954

go&ernance -rinci-le!. ran!-arency) in"e-en"ent "irector! an" a !e-arate au"it co##ittee are

e!-ecially i#-ortant. So#e international in&e!tor! ill not !eriou!ly con!i"er in&e!ting in a

co#-any that "oe! not ha&e the!e thing!.

Se&eral organi5ation! ha&e -o--e" u- in recent year! to hel- a"o-t an" i#-le#ent goo"

cor-orate go&ernance -rinci-le!. he Organi!ation for Econo#ic Coo-eration an" 3e&elo-#ent)

the Worl" an1) the International $inance Cor-oration) the %.S. Co##erce an" State

3e-art#ent! an" nu#erou! other organi5ation! ha&e /een encouraging go&ern#ent! an" fir#! in

Ea!tern Euro-e to a"o-t an" i#-le#ent cor-orate co"e! of con"uct an" goo" cor-orate

go&ernance -rinci-le!.

he Center for International Pri&ate Enter-ri!e 620027 li!t! !o#e of the #ain attri/ute! of

goo" cor-orate go&ernance. he!e inclu"e

Re"uction of ri!1

Sti#ulation of -erfor#ance

I#-ro&e" acce!! to ca-ital #ar1et!

Enhance#ent of #ar1eta/ility of goo"! an" !er&ice!

I#-ro&e" lea"er!hi-

3e#on!tration of tran!-arency an" !ocial accounta/ility

hi! li!t i! /y no #ean! e4hau!ti&e. 9oe&er) it "oe! !u##ari5e !o#e of the #o!t

i#-ortant /enefit! of goo" cor-orate go&ernance. All countrie!) hether "e&elo-e" or

"e&elo-ing face !i#ilar i!!ue! hen it co#e! to cor-orate go&ernance. 9oe&er) tran!ition

econo#ie! face a""itional hur"le! /ecau!e their cor-orate /oar"! lac1 the in!titutional #e#ory

an" e4-erience that /oar"! in "e&elo-e" #ar1et econo#ie! ha&e. hey al!o ha&e -articular

2


3/38

challenge! that the #ore "e&elo-e" econo#ie! "o not face to the !a#e e4tent. So#e of the!e

e4tra challenge! inclu"e

E!ta/li!hing a rule:/a!e" 6a! o--o!e" to a relation!hi-:/a!e"7 !y!te# of go&ernance;

Co#/ating &e!te" intere!t!;

3i!#antling -yra#i" oner!hi- !tructure! that allo in!i"er! to control an") at ti#e!)

!i-hon off a!!et! fro# -u/licly one" fir#! /a!e" on &ery little "irect e


4/38

REVIEW OF THE *ITERATURE

9un"re"! of article! an" "o5en! of /oo1! ha&e /een ritten a/out cor-orate go&ernance

in the la!t fe year! alone. One /oo1 that !houl" /e #entione" i! Corporate Governance /y

(on1! an" (ino 6200?7. 3a&i! Glo/al A"&i!or! -u/li!he! an annual Leading Corporate

Governance Indicators6200@7) hich #ea!ure! cor-orate go&ernance co#-liance u!ing a &ariety

of in"icator!.

he Ca"/ury Re-ort 6',,27 -u/li!he" the fin"ing! of the Co##ittee on $inancial

A!-ect! of Cor-orate Go&ernance. he Green/ury Re-ort 6',,7 "i!cu!!e! "irector!>

re#uneration. he 9a#-el Co##ittee Re-ort 6',,87 a""re!!e! !o#e of the !a#e i!!ue! a! the

Ca"/ury an" Green/ury re-ort!. It ha! !e-arate !ection! on the -rinci-le! of cor-orate

go&ernance) the role of "irector!) "irector!> re#uneration) the role of !harehol"er!) accounta/ility

an" au"it an" i!!ue" conclu!ion! an" reco##en"ation!. he Encyclopedia of Corporate

Governancei! a goo" reference tool for o/taining infor#ation on cor-orate go&ernance. It i!

a&aila/le online. he OEC3>!Principles of Corporate Governance6',,,7 ha! /een u!e" a! a

/ench#ar1 for a nu#/er of cor-orate go&ernance co"e! in tran!ition econo#ie!. OEC3 ha! al!o

-u/li!he" a Survey of Corporate Governance Developments in OECD Countries6200+/7. he

Euro-ean Cor-orate Go&ernance In!titute #aintain! #any lin1! to co"e! of cor-orate con"uct for

#any countrie! on it! e/!ite.

he OEC3 ha! al!o -u/li!he" !e&eral !tu"ie! on cor-orate go&ernance in A!ia) the #o!t

nota/le /eing it! White Paper on Corporate Governance inAsia 6200+c7. Clar1e 620007

critici5e" cor-orate go&ernance !tructure! in A!ia. 9i! critici!# focu!e" on the A!ian financial

cri!i!) hich a! -artially cau!e" /y -oor cor-orate go&ernance -ractice!.

?


5/38

he Securitie! an" E4change oar" of In"ia 620027 i!!ue" the umar !eport on

cor-orate go&ernance in In"ia. hi! re-ort atte#-te" to e&ol&e a co"e of cor-orate go&ernance

for In"ian cor-oration!. (ani 6200?7 "i" a country !tu"y of In"ia for Stan"ar" B Poor>! that

loo1e" at a nu#/er of factor!) inclu"ing #ar1et infra!tructure) the legal en&iron#ent) the

regulatory en&iron#ent an" the infor#ational infra!tructure.

Solo#on) Solo#on an" Par1 62002a7 "e&elo-e" a conce-tual fra#eor1 for cor-orate

go&ernance in Korea. hey al!o e4a#ine" !o#e e#-irical e&i"ence on the e&ol&ing role of

in!titutional in&e!tor! 62002/7. Jang an" Ki# 620027 "i" a ca!e !tu"y of Sa#!ung Cor-oration>!

go&ernance -olicie! an" -roce"ure!. Ki# 6200+7 loo1e" at the interloc1ing oner!hi- of the

Korean chae/ol!. Wong 6200?7 "i" a country go&ernance !tu"y of Korea for Stan"ar" B Poor>!

that e4a#ine" the !a#e factor! a! tho!e e4a#ine" /y (ani 6200?7 in the In"ia !tu"y.

Se&eral !tu"ie! of &ariou! a!-ect! of cor-orate go&ernance ha&e /een "one for China.

3ahya) Kar/hari) iao an" Dang 6200+7 e4a#ine" the u!efulne!! of the !u-er&i!ory /oar"

re-ort. Chen 6200?7 ta1e! a critical &ie of the cor-orate go&ernance -olicie! of China>! !tate:

one" enter-ri!e!. a# 620007 al!o loo1! at !tate:one" enter-ri!e! an" atte#-t! to outline a

ne cor-orate go&ernance #o"el that i! a--ro-riate for China>! econo#ic an" !ocial con"ition!.

GUIDE*INES

Nu#erou! article!) "ocu#ent! an" re-ort! ha&e /een -u/li!he" in recent year! that

-ro&i"e !o#e -olicy gui"eline! for goo" cor-orate go&ernance. Such "ocu#ent! are e!-ecially

&alua/le for tran!ition econo#ie!) !ince the !u/=ect of cor-orate go&ernance i! ne for the# an"

e&en their to- go&ern#ent an" -ri&ate !ector lea"er! ha&e little or no e4-erience go&erning

#ar1et oriente" -ri&ate fir#! that ha&e a -u/lic con!tituency. One of the /etter "ocu#ent! in thi!


6/38

area a! -u/li!he" /y the In!titute of International $inance. It! Policies for Corporate

Governance and "ransparency in Emerging #ar$ets 620027 -ro&i"e! a !et of gui"eline! that

cor-orate officer! an" "irector! can u!e hen e!ta/li!hing or re&i!ing their on co#-any>!

cor-orate go&ernance rule!. 9ere are !o#e of the #ain !ugge!tion!.

Miorit# S'are'older Protectio

he co#-any !houl" ha&e a for#al -olicy that "efine! &oter right! an" hich cor-orate

action! re


7/38

Sharehol"er a--ro&al !houl" /e re


8/38

(inute! of #eeting! !houl" /eco#e -art of the -u/lic recor". he e!t Practice oul" /e to

a--ly thi! rule to all co#-anie!.

he ! article! of a!!ociation or /yla! !houl" clearly !tate the re!-on!i/ilitie! of

8


9/38

"irector! an" #anager!. hi! "ocu#ent !houl" /e acce!!i/le to all !harehol"er!. he chair#an or

CEO !houl" -u/li!h a !tate#ent of cor-orate !trategy in the annual re-ort.

Any actual or -otential conflict of intere!t in&ol&ing a /oar" #e#/er or !enior e4ecuti&e

!houl" /e "i!clo!e". oar" #e#/er! !houl" a/!tain fro# &oting in ca!e! here they ha&e a

conflict of intere!t. he au"it or ethic! co##ittee i! re


10/38

co##ittee chair to /e an in"e-en"ent "irector regar"le!! of co#-any !i5e. he chair #u!t ha&e a

financial /ac1groun". A #ini#u# of one ee1 !houl" /e allocate" for any co##ittee re&ie of

an au"it. Co##unication /eteen the internal an" e4ternal au"itor !houl" /e ithout ha&ing

e4ecuti&e! -re!ent. Any "e-arture! fro# accounting !tan"ar"! #u!t /e e4-laine" in the annual

re-ort.

Tra",arec# o- O/er"'i, ad Cotrol

e!t Practice call! for !ignificant oner!hi- 620:0) inclu"ing cro!!:hol"ing!7 to /e

"ee#e" a! control. $or /uyout offer! to #inority !harehol"er!) e!t Practice call! for oner!hi-

e4cee"ing + to /e con!i"ere" a! triggering a /uyout offer in hich all !harehol"er! are treate"

e !harehol"ing! an" all in!i"er

"ealing! /y "irector! an" !enior e4ecuti&e! !houl" /e "i!clo!e" ithin + "ay! of e4ecution. e!t

Practice call! for !harehol"er! ith #ini#ally !ignificant oner!hi- 6+:'07 of out!tan"ing

!hare" to "i!clo!e their hol"ing!. here !houl" /e in"e-en"ence /eteen in"u!try an"

go&ern#ent. here !houl" /e rule! outlining acce-ta/le e#-loyee an" #anage#ent con"uct.

hi! In!titute of International $inance "ocu#ent i! not the only co#-rehen!i&e !et of

gui"eline! on cor-orate go&ernance -ractice!. he Organi5ation for Econo#ic Coo-eration an"

3e&elo-#ent 6OEC37 6',,,; 2002; 200+aB/7 ha! !e&eral co#-rehen!i&e "ocu#ent! a! ell.

Pri&ate grou-! ha&e al!o i!!ue" co#-rehen!i&e gui"ance "ocu#ent!. Gregory 620007 ha!

-u/li!he" a #a=or !tu"y that co#-are! &ariou! !et! of gui"eline!.

(erely ha&ing rule! an" gui"eline! i! not enough to en!ure !ucce!!) hoe&er. Culture)

in!titution! an" organi5ational !tructure al!o -lay an i#-ortant role. Roth an" Ko!to&a 6200+7

con"ucte" a #a=or !tu"y of ')@2+ fir#! in 22 countrie! in Central an" Ea!tern Euro-e an" the

'0


11/38

Nely In"e-en"ent State! an" foun" that a fir#>! a"o-ting a ne go&ernance !tructure ill /e

hel-e" or hin"ere" /a!e" on the!e factor!.

ASIAN CASE STUDIES

he Worl" an1 6200+; 200?a B /; 200a) / B c; 200a B /7 ha! con"ucte" a nu#/er of

!tu"ie! of cor-orate go&ernance -ractice! in &ariou! countrie! all o&er the orl". It ha!

con"ucte" eight !tu"ie! of A!ian countrie!. hi! -art of the -a-er !u##ari5e! !o#e of the

co#-onent! of tho!e !tu"ie!. Noticea/ly a/!ent are China an" Ja-an. It cla!!ifie" the e4tent of

the o/!er&ance of &ariou! cor-orate go&ernance -ractice! into fi&e categorie!. he folloing

ta/le! !ho the cla!!ification for each of the eight A!ian countrie! in #ore than a "o5en

categorie!. he categorie! are a! follo!

O O/!er&e"

*O *argely O/!er&e"

PO Partially O/!er&e"

(NO (aterially Not O/!er&e"

NO Not O/!er&e"

)a"ic S'are'older Ri't"

he cor-orate go&ernance fra#eor1 !houl" -rotect !harehol"er!> right!. a!ic

!harehol"er right! inclu"e the right to 6'7 !ecure #etho"! of oner!hi-

regi!tration; 627 con&ey or tran!fer !hare!; 6+7 o/tain rele&ant infor#ation on thecor-oration on a ti#ely an" regular /a!i!; 6?7 -artici-ate an" &ote in general

!harehol"er #eeting!; 67 elect #e#/er! of the /oar"; an" 67 !hare in the -rofit!

of the cor-oration. 6Worl" an1 200?a7

''


12/38

a/le ' !ho! the !core! for the category a!ic Sharehol"er Right!. In"ia a! the only

country earning the highe!t !core. $i&e countrie! largely o/!er&e" /a!ic !harehol"er right!.

In"one!ia an" ietna# only -artly o/!er&e" /a!ic !harehol"er right!.

Table %

)a"ic S'are'older Ri't"

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

Partici,atio Ri't"

Sharehol"er! ha&e the right to -artici-ate in) an" to /e !ufficiently infor#e" on)

"eci!ion! concerning fun"a#ental cor-orate change!) !uch a! 6'7 a#en"#ent! to

the go&erning "ocu#ent! of the co#-any; 627 the authori5ation of a""itional

!hare!; an" 6+7 e4traor"inary tran!action! that in effect re!ult in the !ale of theco#-any. 6Worl" an1 200?a7

a/le 2 !ho! ho the countrie! !core! in the area of -artici-ation right!. hi! ti#e /oth

In"ia an" Korea ha" the to- rating!. In"one!ia) Pa1i!tan an" the Phili--ine! largely o/!er&e

-artici-ation right!) herea! (alay!ia) hailan" an" ietna# only -artly o/!er&e the!e right!.

'2


13/38

Table 0

Partici,atio Ri't"

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

S'are'older"1 AGM Ri't"

Sharehol"er! !houl" ha&e the o--ortunity to -artici-ate effecti&ely an" &ote ingeneral !harehol"er #eeting! an" !houl" /e infor#e" of the rule!) inclu"ing

&oting -roce"ure!) that go&ern the#. 6'7 Sharehol"er! !houl" /e furni!he" ith

!ufficient an" ti#ely infor#ation concerning the "ate) location an" agen"a of

general #eeting!) a! ell a! full an" ti#ely infor#ation regar"ing the i!!ue! to /e"eci"e" at the #eeting. 627 O--ortunity !houl" /e -ro&i"e" for !harehol"er! to

a!1


14/38

Table 2

S'are'older"1 AGM Ri't"

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

Di",ro,ortioate Cotrol Di"clo"+re

Ca-ital !tructure! an" arrange#ent! that ena/le certain !harehol"er! to o/tain a

"egree of control "i!-ro-ortionate to their e


15/38

Table $

Di",ro,ortioate Cotrol Di"clo"+re

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

Mar3et -or Cor,orate Cotrol

(ar1et! for cor-orate control !houl" /e alloe" to function in an efficient an"

tran!-arent #anner. 6Worl" an1 200?a7

In the area of the #ar1et for cor-orate control the only country that got the highe!t rating

a! In"ia. a/le !ho! the relati&e rating!. $i&e of the eight countrie! "i" -oorly in thi!

category) although none of the# earne" the loe!t -o!!i/le rating.

'


16/38

Table 4

Mar3et -or Cor,orate Cotrol

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

E5+al Treat(et o- S'are'older"

he cor-orate go&ernance fra#eor1 !houl" en!ure the e


17/38

Table 6

E5+al Treat(et o- S'are'older"

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

Pro'ibit I"ider Tradi

In!i"er tra"ing an" a/u!i&e !elf:"ealing !houl" /e -rohi/ite". 6Worl" an1

200?a7

a/le @ !ho! the !core! for the -rohi/iting in!i"er tra"ing category. he #o!t fre


18/38

&iolation! of right! 6(cGee) 20087. Rule! that #erely -rohi/it in!i"er tra"ing ithout ta1ing

-articular circu#!tance! into account are counter-ro"ucti&e.

Table 7Pro'ibit I"ider Tradi

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

Di"clo"+re o- Itere"t"

(e#/er! of the /oar" an" #anager! !houl" /e re


19/38

Table 8

Di"clo"+re o- Itere"t"

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

Sta3e'older Ri't" Re",ected

he cor-orate go&ernance fra#eor1 !houl" recogni5e the right! of !ta1ehol"er!a! e!ta/li!he" /y la an" encourage acti&e co:o-eration /eteen cor-oration! an"

!ta1ehol"er! in creating ealth) =o/!) an" the !u!taina/ility of financially !oun"

enter-ri!e!. he cor-orate go&ernance fra#eor1 !houl" a!!ure that the right! of

!ta1ehol"er! that are -rotecte" /y la are re!-ecte". 6Worl" an1 200?a7

a/le , !ho! the relati&e !core!. In"ia an" Pa1i!tan ha" the highe!t !core!) folloe" /y

(alay!ia) the Phili--ine! an" hailan" in the !econ" /e!t category. In"one!ia) Korea an"

ietna# only -artially o/!er&e" thi! gui"eline.

',


20/38

Table 9

Sta3e'older Ri't" Re",ected

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

Redre"" -or Violatio o- Ri't"

Where !ta1ehol"er intere!t! are -rotecte" /y la) !ta1ehol"er! !houl" ha&e the

o--ortunity to o/tain effecti&e re"re!! for &iolation! of their right!. 6Worl" an1

200?a7

a/le '0 !ho! the re!ult!. Korea a! the only country !coring in the highe!t category.

he category li!te" #o!t fre


21/38

Table %

Redre"" -or Violatio o- Ri't"

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

Per-or(ace E'ace(et

he cor-orate go&ernance fra#eor1 !houl" -er#it -erfor#ance:enhance#ent

#echani!#! for !ta1ehol"er -artici-ation. 6Worl" an1 200?a7

a/le '' !ho! the !core! for each country. In"ia an" Pa1i!tan !core" in the highe!t

category. he other countrie! ere e&enly !-lit /eteen the !econ" an" thir" /e!t category.

2'


22/38

Table %%

Per-or(ace E'ace(et

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

Acce"" to I-or(atio

Where !ta1ehol"er! -artici-ate in the cor-orate go&ernance -roce!!) they !houl"

ha&e acce!! to rele&ant infor#ation. 6Worl" an1 200?a7

In"ia an" Korea gi&e their !harehol"er! the /e!t acce!! to infor#ation. In"one!ia) the

Phili--ine! an" ietna# gi&e their !harehol"er! the lea!t acce!!) although none of the!e

countrie! earne" the loe!t or !econ" loe!t rating in thi! category. a/le '2 !ho! the rating!.

22


23/38

Table %0

Acce"" to I-or(atio

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

Di"clo"+re Stadard"

he cor-orate go&ernance fra#eor1 !houl" en!ure that ti#ely an" accurate"i!clo!ure i! #a"e on all #aterial #atter! regar"ing the cor-oration) inclu"ing the

financial !ituation) -erfor#ance) oner!hi-) an" the go&ernance of the co#-any.

3i!clo!ure !houl" inclu"e) /ut not /e li#ite" to) #aterial infor#ation on 6'7 he

financial an" o-erating re!ult! of the co#-any. 627 Co#-any o/=ecti&e!. 6+7(a=or !hare oner!hi- an" &oter right!. 6?7 (e#/er! of the /oar" an" 1ey

e4ecuti&e!) an" their re#uneration. 67 (aterial fore!eea/le ri!1 factor!. 67(aterial i!!ue! regar"ing e#-loyee! an" other !ta1ehol"er!. 6@7 Go&ernance

!tructure! an" -olicie!. 6Worl" an1 200?a7

3i!clo!ure !tan"ar"! ere not -articularly goo" for any of the countrie!. None of the#

earne" the to- rating. ietna# ha" the loe!t rating in thi! category. a/le '+ !ho! the re!ult!.

2+


24/38

Table %2

Di"clo"+re Stadard"

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

Acco+ti ; A+dit Stadard"

Infor#ation !houl" /e -re-are") au"ite" an" "i!clo!e" in accor"ance ith high


25/38

Table %$

Acco+ti ad A+dit Stadard"

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

Ide,edet A+dit"

An annual au"it !houl" /e con"ucte" /y an in"e-en"ent au"itor in or"er to-ro&i"e an e4ternal an" o/=ecti&e a!!urance on the ay in hich financial

!tate#ent! ha&e /een -re-are" an" -re!ente". 6Worl" an1 200?a7

A! a/le ' !ho!) none of the countrie! o/!er&e" the gui"eline for in"e-en"ent au"it!)although half of the# largely o/!er&e" it.

2


26/38

Table %4

Ide,edet A+dit"

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

Fair ; Ti(el# Di""e(iatio

Channel! for "i!!e#inating infor#ation !houl" -ro&i"e for fair) ti#ely an" co!t:effecti&e acce!! to rele&ant infor#ation /y u!er!. 6Worl" an1 200?a7

In"ia an" Korea ere the only countrie! that o/!er&e" the gui"eline for fair an" ti#ely

"i!!e#ination of infor#ation. ietna# !core" the loe!t in thi! category. a/le ' !ho! the

re!ult!.

2


27/38

Table %6

Fair ad Ti(el# Di""e(iatio

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

Act" /it' D+e Diliece< Care

he cor-orate go&ernance fra#eor1 !houl" en!ure the !trategic gui"ance of theco#-any) the effecti&e #onitoring of #anage#ent of the /oar") an" the /oar">!

accounta/ility to the co#-any an" the !harehol"er!. oar" #e#/er! !houl" act on

a fully infor#e" /a!i!) in goo" faith) ith "ue "iligence an" care) an" in the /e!t

intere!t of the co#-any an" the !harehol"er!. 6Worl" an1 200?a7

A! a/le '@ !ho!) none of the countrie! achie&e" the to- !core for "ue "iligence an"

care. Se&enty:fi&e -ercent !core" in the -artially o/!er&e" category.

2@


28/38

Table %7

Act" /it' D+e Diliece< Care

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

Treat All S'are'older" Fairl#

Where /oar" "eci!ion! #ight affect "ifferent !harehol"er grou-! "ifferently) the

/oar" !houl" treat all !harehol"er! fairly. 6Worl" an1 200?a7

None of the countrie! alay! treat all !harehol"er! fairly) a! i! !hon in a/le '8. In"ia)

(alay!ia an" hailan" largely o/!er&e thi! /ench#ar1.

28


29/38

Table %8

Treat All S'are'older" Fairl#

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

E"+re Co(,liace /it' *a/

he /oar" !houl" en!ure co#-liance ith a--lica/le la an" ta1e into account

the intere!t! of !ta1ehol"er!. 6Worl" an1 200?a7

Only In"ia fully co#-lie! ith thi! re


30/38

Table %9

E"+re Co(,liace /it' *a/

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

T'e )oard S'o+ld F+l-ill Certai =e# F+ctio"

he /oar" !houl" fulfill certain 1ey function!) inclu"ing 6'7 re&ieing an"

gui"ing cor-orate !trategy) #a=or -lan! of action) ri!1 -olicy) annual /u"get! an"

/u!ine!! -lan!; !etting -erfor#ance o/=ecti&e!; #onitoring i#-le#entation an"cor-orate -erfor#ance an" o&er!eeing #a=or ca-ital e4-en"iture!) ac! accounting an" financial re-orting !y!te#!) inclu"ing the

in"e-en"ent au"it) an" that a--ro-riate !y!te#! of control are in -lace in-articular) !y!te#! for #onitoring ri!1) financial control) an" co#-liance ith the

la. 67 (onitoring the effecti&ene!! of the go&ernance -ractice! un"er hich it

o-erate! an" #a1ing change! a! nee"e". 6@7 O&er!eeing the -roce!! of "i!clo!urean" co##unication!. 6Worl" an1 200?a7

None of the countrie! earne" the to- !core in thi! category. In"ia) Korea an" (alay!ia

largely o/!er&e the gui"eline!. ietna# ha" the loe!t !core. a/le 20 !ho! the !core!.

+0


31/38

Table 0

T'e )oard S'o+ld F+l-ill Certai =e# F+ctio"

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

T'e )oard S'o+ld be Able to E>erci"e Ob?ecti!e @+d(et

he /oar" !houl" /e a/le to e4erci!e o/=ecti&e =u"g#ent on cor-orate affair!

in"e-en"ent in -articular) fro# #anage#ent. 6'7 oar"! !houl" con!i"era!!igning a !ufficient nu#/er of non:e4ecuti&e /oar" #e#/er! ca-a/le of

e4erci!ing in"e-en"ent =u"g#ent to ta!1! here there i! a -otential for conflict ofintere!t. E4a#-le! of !uch 1ey re!-on!i/ilitie! are financial re-orting) no#ination)

an" e4ecuti&e an" /oar" re#uneration. 627 oar" #e#/er! !houl" "e&ote

!ufficient ti#e to their re!-on!i/ilitie!. 6Worl" an1 200?a7

a/le 2' !ho! the !core! for thi! to-ic. None of the countrie! earne" the highe!t !core

an" only (alay!ia earne" the !econ" /e!t !core. Si4 countrie! only -artially o/!er&e thi!

gui"eline. ietna# earne" the loe!t !core for the grou-.

+'


32/38

Table 0%

E>erci"e Ob?ecti!e @+d(et

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

Acce"" to I-or(atio

In or"er to fulfill their re!-on!i/ilitie!) /oar" #e#/er! !houl" ha&e acce!! to

accurate) rele&ant an" ti#ely infor#ation. 6Worl" an1 200?a7

One #ight thin1 that thi! ite# oul" !ho high !core!) /ut !uch a! not the ca!e. Only

In"ia an" Pa1i!tan ha" the highe!t !core. he other !i4 countrie! ere e&enly "i&i"e" /eteen

the !econ" an" thir" /e!t !core!. a/le 22 !ho! the re!ult!.

+2


33/38

Table 00

Acce"" to I-or(atio

O *O PO (NO NO

In"ia 4

In"one!ia 4

Korea 4

(alay!ia 4

Pa1i!tan 4

Phili--ine! 4

hailan" 4

ietna# 4

Co+tr# Co(,ari"o"

he a/o&e ta/le! rate" the eight A!ian countrie! in 22 categorie!. he ne4t !te- i! to

a!!ign -oint &alue! to each of tho!e categorie!) a! follo!

O O/!er&e" L -oint!M

*O *argely O/!er&e" L? -oint!M

PO Partially O/!er&e" L+ -oint!M

(NO (aterially Not O/!er&e" 2 -oint!M

NO Not O/!er&e" L' -ointM

If a country earne" the highe!t !core for each of the 22 categorie!) it>! cor-orate

go&ernance !core oul" /e ''0 L22 4 M. he loe!t -o!!i/le !core oul" /e 22 L22 4 'M. a/le

2+ !ho! the !core!) the a&erage! an" the -ercentage! for each country.

++


34/38

In"ia ha" the highe!t total !core) at ,2) hich a! 8+. -ercent of the -o!!i/le !core

L,2''0 8+.M. It al!o ha" the highe!t a&erage !core) ?.'8 L,222M. ietna# ha" the loe!t

o&erall !core.

Table 02

Total" b# Co+tr#

otal! A&erage!

In"ia ,2 ?.'8 8+.

In"one!ia +.00 0.0

Korea 8? +.82 @.?

(alay!ia 8 +.8 @@.+

Pa1i!tan 8+ +.@@ @.

Phili--ine! @' +.2+ ?.

hailan" 80 +.? @2.@

ietna# 2. 0.'

Chart ' !ho! the !core! for each of the eight A!ian countrie!.

C'art %

CG Score" Aba"ed o %::B

8+.G@@.+ @G.? @A.A @2.@

G?.AG0

A0.'

0

'0

20

+0

?0

A0

G0

@0

80

,0

'00

In"ia

(alay!ia

Korea

Pa1i!

tan

2hail

an

Phili--

ine

In"one

!ia

ietn

a#

+?


35/38

None of the countrie! ha" a -erfect !core of ''0 6'007. In"ia ca#e clo!e!t ith a

-ercentage !core of 8+.) folloe" clo!ely /y (alay!ia 6@@.+7. Ne4t are Korea an" Pa1i!tan.

hailan" a! in fifth -lace) folloe" /y the Phili--ine!) In"one!ia an" ietna#) hich ha" the

loe!t !core at 0.'.

CONC*UDING COMMENTS

None of the countrie! earne" a -erfect !core of ''0) hich #ean! they all ha&e !o#e

or1 to "o to #eet the cor-orate go&ernance gui"eline!. ut !o#e countrie! ha&e #ore or1 to

"o than other!. ietna# can /e e4cu!e" for ha&ing !uch a lo !core. It i! a relati&ely ne entrant

to the #ar1et an" ha! not /een trying to attract foreign in&e!t#ent fro# the -ri&ate !ector a! long

a! ha&e !o#e of the other A!ian countrie!. he -ri&ate !ector in ietna# i! !till in the fle"gling

!tage an" ill -ro/a/ly continue at thi! le&el of "e&elo-#ent for !o#e ti#e) although the country

ha! a relati&ely high groth rate. ut it i! !tarting fro# !uch a lo le&el of econo#ic acti&ity that

it ha! a ay to go /efore /eco#ing co#-etiti&e in international ca-ital #ar1et!.

he relati&ely high !core of In"ia "oe! not co#e a! a !ur-ri!e. Although In"ia i! note" for

/ureaucracy an" corru-tion) it! cor-oration! are #a1ing -rogre!! in the area of cor-orate

go&ernance. Korea i! one of the A!ian tiger!. It ha! rea"y acce!! to ca-ital) -artly /ecau!e of it!

relati&ely goo" cor-orate go&ernance -ractice! /ut al!o /ecau!e of the !tructure of the Korean

econo#y. he goo" ol" /oy netor1 i! !till ali&e an" ell there.

he !core! for each of the!e countrie! ill li1ely i#-ro&e ith ti#e. here i! internal

-re!!ure to i#-ro&e cor-orate go&ernance a! ell a! e4ternal -re!!ure. he #ar1et -ro&i"e!

incenti&e! to i#-ro&e an" to co#-ete in -ractically e&ery area of econo#ic acti&ity) inclu"ing

+


36/38

the real# of cor-orate go&ernance. ho!e ho "o not clean u- their act ill /e left /ehin" a!

cor-oration! in other countrie! i#-ro&e their cor-orate go&ernance -ractice!.

REFERENCES

Ca"/ury) A.) et al. 6he Ca"/ury Re-ort7 6',,27.!eport of the Committee on %inancial Aspects

of Corporate Governance) 3ece#/er ') ',,2) *on"on Gee Pu/li!hing *t". A&aila/le at

htt-.orl"/an1.orght#lf-"-ri&ate!ectorcg"oc!ca"/ury.-"f.

Center for International Pri&ate Enter-ri!e 620027. Instituting Corporate Governance inDeveloping& Emerging and "ransitional Economies' A (and)oo$. Wa!hington) 3C he

Center for International Pri&ate Enter-ri!e. .ci-e.org.

Chen) J.J. 6200?7. Cor-orati!ation of China>! State:One" Enter-ri!e! an" Cor-orate

Go&ernance. Corporate O*nership + Control) '627) 82:,+.Clar1e) . 620007. 9ae#orrhaging iger! he Poer of International $inancial (ar1et! an" the

Wea1ne!!e! of A!ian (o"e! of Cor-orate Go&ernance. Corporate Governance) 8627)'0':''.

3ahya) J.) Kar/hari) D.) iao) J. B Dang) (. 6200+7. he %!efulne!! of the Su-er&i!ory oar"

Re-ort in China. Corporate Governance) ''6?7) +08:+2'.3a&i! Glo/al A"&i!or! [email protected] Corporate Governance Indicators&Neton) (A 3a&i!

Glo/al A"&i!or!. ."a&i!glo/al.co#-u/lication!lcgiin"e4.ht#lAnnual -u/lication.

Euro-ean Cor-orate Go&ernance In!titute lin1 to Co"e! htt-.ecgi.orgco"e!allco"e!.ht#

Encyclopedia of Corporate Governancehtt-.encycogo&.co#.Green/ury) R. et al. 6Green/ury Re-ort7. 6',,7.Directors, !emuneration' !eport of a Study

Group Chaired )y Sir !ichard Green)ury&*on"on Gee Pu/li!hing *t".) July '@) ',,.

A&aila/le at htt-./aacg!ig.


37/38

Organi!ation for Econo#ic Coo-eration an" 3e&elo-#ent 6',,,7. Principles of Corporate

Governance. Pari! OEC3. A&aila/le at

htt-.oec".org"ataoec"?@0?+?@?.-"f.Organi!ation for Econo#ic Coo-eration an" 3e&elo-#ent 620027. White Paper on Corporate

Governance in !ussia. Pari! OEC3) A-ril '. A&aila/le at

htt-.oec".org"ataoec"'0+2@8,,82.-"f.Organi!ation for Econo#ic Coo-eration an" 3e&elo-#ent 6200+a7. White Paper on Corporate

Governance in South Eastern Europe. Pari! OEC3. .oec".org.

Organi!ation for Econo#ic Coo-eration an" 3e&elo-#ent 6200+/7. Survey of CorporateGovernance Developments in OECD Countries) Pari! OEC3.

Organi!ation for Econo#ic Coo-eration an" 3e&elo-#ent 6200+c7. White Paper on Corporate

Governance in Asia/Pari! OEC3.

Roth) K. B Ko!to&a) . 6200+7. Organi5ational Co-ing ith In!titutional %-hea&al in ran!itionEcono#ie!.0ournal of World -usiness) +86?7) +'?:++0.

Securitie! an" E4change oar" of In"ia 620027.!eport of the Committee Appointed )y the SE-I

on Corporate Governance under the Chairmanship of Shri umar #angalam -irla

6Ku#ar Re-ort7. Securitie! an" E4change oar" of In"ia.Solo#on) J.) Solo#on) A. B Par1) C. 62002a7. A Conce-tual $ra#eor1 for Cor-orate

Go&ernance Refor# in South Korea. Corporate Governance) '06'7) 2,:?.Solo#on) J.) Solo#on) A. B Par1) C. 62002/7. he E&ol&ing Role of In!titutional In&e!tor! in

South Korean Cor-orate Go&ernance So#e E#-irical E&i"ence. Corporate Governance)

'06+7) 2'':22?.a#) O.K. 620007. (o"el! of Cor-orate Go&ernance for Chine!e Co#-anie!. Corporate

Governance) 86'7) 2:?.

Wong) C. 6200?7. Country Governance Study' orea. 9ong Kong Stan"ar" B Poor>!.

Worl" an1 an" International (onetary $un" 6200+7.!eport on the O)servance of Standardsand Codes 1!OSC2& Corporate Governance Country Assessment' !epu)lic of orea.

Wa!hington) 3C Worl" an1 B I($ 6Se-te#/er7.

Worl" an1 an" International (onetary $un" 6200?a7. !eport on the O)servance of Standardsand Codes 1!OSC2& Corporate Governance Country Assessment' India. Wa!hington) 3C

Worl" an1 B I($ 6A-ril7.

Worl" an1 an" International (onetary $un" 6200?/7.!eport on the O)servance of Standardsand Codes 1!OSC2& Corporate Governance Country Assessment' !epu)lic of Indonesia.

Wa!hington) 3C Worl" an1 B I($ 6Augu!t7.

Worl" an1 an" International (onetary $un" 6200a7. !eport on the O)servance of Standards

and Codes 1!OSC2& Corporate Governance Country Assessment' #alaysia. Wa!hington)3C Worl" an1 B I($ 6June7.

Worl" an1 an" International (onetary $un" 6200/7.!eport on the O)servance of Standards

and Codes 1!OSC2& Corporate Governance Country Assessment' Pa$istan. Wa!hington)3C Worl" an1 B I($ 6June7.

Worl" an1 an" International (onetary $un" 6200c7. !eport on the O)servance of Standards

and Codes 1!OSC2& Corporate Governance Country Assessment' "hailand. Wa!hington)3C Worl" an1 B I($ 6June7.

Worl" an1 an" International (onetary $un" 6200a7. !eport on the O)servance of Standards

and Codes 1!OSC2& Corporate Governance Country Assessment' Philippines.

Wa!hington) 3C Worl" an1 B I($ 6(ay7.

+@
http://www.oecd.org/dataoecd/47/50/4347646.pdfhttp://www.oecd.org/dataoecd/10/3/2789982.pdfhttp://www.oecd.org/http://www.oecd.org/dataoecd/47/50/4347646.pdfhttp://www.oecd.org/dataoecd/10/3/2789982.pdfhttp://www.oecd.org/


38/38

Worl" an1 an" International (onetary $un" 6200/7.!eport on the O)servance of Standards

and Codes 1!OSC2& Corporate Governance Country Assessment' .ietnam. Wa!hington)

3C Worl" an1 B I($ 6June7.

Corp Gov in Asia

Documents

Transcript of Corp Gov in Asia