Corporate Governance in Asia: The Challenge of Improving Transparency

Abstract

Corporate governance (CG) has come to the limelight with the series of corporate failings following which the markets, investors, and society at large have begun to lose faith in the infallibility of these systems. Nowadays, the conduct of those who take care of ‘public’ money is being questioned since they are being tested on ‘ethical’ standards. We have advocated the application of ‘Dharma’, as stipulated in ancient Indian shastras. India can be proud of what it has achieved so far in CG practices but, of course, much more needs to be done. How to increase CG transparency in Asian countries is the biggest challenge? We have provided an overview of two independent studies recently reported by ACGA and JPMorgan. Full convergence with international accounting and audit standards, better protection of minority investors, and stronger enforcement of existing laws and regulations are some of the recommendations to improve governance in Asian countries. CG has been high on the agenda for Asian regulators in recent years with most markets having introduced comprehensive regulations. Still much work remains to be done and despite compelling evidence of the financial benefits to companies of a good governance culture, the ethos of CG has yet to sink in. Regulators, companies, and investors all have to play their vital roles. CG in Asia remains, at best, a work-in-progress requiring some rethinking.