VIDYASAGAR UNIVERSITY JOURNAL OF COMMERCE

CORPORATE GOVERNANCE AND TRANSPARENCY SCENARIO IN ASIA
public’s (and regulator’s) perceptions; transparency was increased for the purpose of
improving CG. The ‘new’ regulations put in place through the “Sarbanes-Oxley Act” in the
USA and the “Combined Codes” in the UK have helped to introduce much-needed reforms,
particularly with regard to CG transparency. Table-6 pinpoints some of the implications of
SOX for Asia.
Table-6: Sarbanes-Oxley’s Echoes in Asia
Question
China
Hong Kong
India
Indonesia
Korea
Malaysia
Philippines
Singapore
Taiwan
Thailand
Disclosure of audit and non-audit fees to Y Y Y N Y Y S Y Y Y
external auditor?
Following international standards on the S Y Y S S S Y Y Y Y
independence of external auditors?
Must CEO, CFO, or directors certify the Y S Y Y Y M Y S S Y
annual accounts?
Strengthening regulation of the accounting S S M S S S S Y S S
and auditing profession?
[Keys: Y = Yes; S = Somewhat; M = Marginally; N = No]
Massive governance failures at a few companies have destroyed the “reputation” capital of
the corporate sector as a whole, and made governance as a topic of growing interest to
academics and practitioners alike. Nonetheless, weaknesses still remains, which continue to
tarnish the reputation of many companies and put downward pressure on their share prices.
Beyond simply complying with these “new” regulations, companies that care about their
reputation must also care about how their governance structures and policies are perceived
by the investors and the wider stakeholder community that continuously monitors their
activities. As Fombrun (2006) asserts: “The fact that only eight of GMI’s 33 top-rated
companies have high visibility and that of these only four (Eastman Kodak, Home Depot,
Procter & Gamble, and Xerox) receive high reputation quotient (RQ) scores indicates that
strong governance policies alone do not necessarily translate to high visibility and
perception.” Not only must they implement policies that align with the ‘best practice’
models proposed nationally and internationally, but they must ensure that the internal
practices they put in place are strictly adhered to and communicated to their many interested
and concerned stakeholders. Companies that do are increasingly finding that adopting “bestin-class”
governance not only helps them avoid regulatory scrutiny and risk, but also
provides a springboard for the implementation of value-adding strategies. Having a senior
‘governance officer’ responsible for consistency in putting these practices in place is crucial.
18 Vidyasagar University Journal of Commerce