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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
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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
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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
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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!.
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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!
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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
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Sharehol"er a--ro&al !houl" /e re
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(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
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"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
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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
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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
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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!.
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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
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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
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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.
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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
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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
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&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
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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.
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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
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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.
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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
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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+
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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
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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
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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
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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@
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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
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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
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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
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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-.
+'
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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
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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.
++
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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#
+?
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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
+
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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!.
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