Owning the problem

29 September 2016 By Quentin Webb

Asian corporate governance is improving despite frequent scandals, according to a review, which goes on to call on institutional investors to speak up more. Fair enough, but majority owners can still bully outsiders so long as the latter lack say over independent directors.

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"Asia is getting better" when it comes to corporate governance, brokerage CLSA and the Asian Corporate Governance Association concluded in a biennial report released on Sept. 29.

CLSA's "bottom-up" survey of companies covered by its equity analysts saw Japan move up the rankings to second place behind Australia, as domestic reforms "tangibly improve behaviour." Third, fourth and fifth place were taken by Singapore, Hong Kong, and Taiwan, followed by Thailand, India and Malaysia. The lowest scores in the CLSA survey, which covers 11 Asian nations and includes Australia for comparison, were awarded to China, the Philippines, Indonesia and South Korea.

The ACGA's "top-down survey" of overall market practice, which grades markets by their discipline, transparency, independence, responsibility, fairness and environmental and social responsibility, was led by Singapore and Hong Kong.

"Reforms matter but how companies respond and deliver them is crucial. Investor engagement makes persistent improvement more likely," the authors wrote. "Asia is getting better and will continue to do so if stakeholders, including agitators, remain engaged."

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