Asia’s Governance Challenge [Archive.org URL]

Corporate governance has undoubtedly improved in Asia. Some countries-Singapore in particular-have made significant progress. The next step is to instill the new behavior, and that will take time. Many corporate leaders, investors, and regulators in Asia articulate the benefits of more effective corporate governance. But they understand that enduring reform won’t be achieved overnight and that, in the short term, many practical impediments and disincentives block the necessary changes.

To move ahead, both governments and companies in Asia must do their part. Companies should create stronger and more purposeful boards; enhance the scope, accuracy, and timeliness of financial reporting; and pay more regard to the rights and interests of minority shareholders. Governments should provide a strong legal and regulatory framework to underpin the reforms. While specific provisions will differ from one country to the next, any reform effort must include elements such as robust corporate and securities laws, tough accounting standards, strong regulators, efficient judicial systems, and determined efforts to clamp down on corruption. Without sustained progress in these foundations of corporate governance, any improvement at individual companies will fall far short of its potential.

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