PDF(2.7mb) - 國家政策研究基金會

54 Taiwan Development Perspectives 2009
I. Introduction
A spate of financial scandals occurred, threatening
Taiwan’s economic development. The stability of the
financial system is likely to protect bank depositors and
investors in financial products. 1
The scandals resulted, by and large, from loose
control over banking. The First Financial Holding
Company was involved in insider trading. The board
chairman of the Chung Shin Commercial Bank was
charged with embezzlement. The Bank of Overseas
Chinese could not cope with a mountain of
non-performing loans. The Kuo Hwa Life Insurance
went under because of its president Da-min Won’s
breach of trust. The public is losing confidence in Taiwan’s
financial system. Taiwan needs financial reform.
The Financial Supervisory Commission (FSC) is considering
reforming the banking industry. 2
The Organization of Economic Cooperation and
Development (OECD) has established principles of
corporate governance which can be used to ensure the
stability of the financial system.3 Corporate govern-
1 See La Porta, Rafael, Florencio Lopez-de-Silanes,
Andrei Shleifer, and Robert Vishny, "Investor Protection
and Corporate Valuation," Journal of Finance.
Vol. LVII, No.3. June 200 .
2 Under the Organic Act Governing the Establishment
of the Financial Supervisory Commission Executive
Yuan, the Financial Supervisory Commission, a single
financial supervisory authority to consolidate the
oversight of banking, securities, and insurance, was
officially established on July 1, 2004 to meet the
needs of Taiwan's financial holding companies operating
in cross-sector businesses. See Richard Abrams
and Michael Taylor, Issues in the Unification of Financial
Sector Supervision, in RK Abrams, M Taylor,
eds - Building Strong Banks: Through Surveillance
and Resolution 146-179 (2002).
3 The threat of systemic risk in international financial
markets necessitates the establishment of universal
ance refers to the structures and processes for the direction
and control of companies. Corporate governance
smoothes the relationships among the management,
board of directors, controlling shareholders, minority
shareholders and other stakeholders in a company.
Good corporate governance contributes to sustainable
economic development by enhancing the performance
of companies and increasing their access to outside
financial markets.
The OECD Principles of Corporate Governance
identify the key practical issues: the rights and equitable
treatment of shareholders and other financial stakeholders,
the role of non-financial stakeholders, disclosure
and transparency, and the responsibilities of the
board of directors. The OECD Principles have gained
acceptance throughout much of the world as an appropriate
framework for analyzing the corporate governance
environments of different markets and as a starting
point for developing approaches to evaluate the effectiveness
of governance of individual companies. The
challenge for Taiwan is to take the OECD Principles as
a model to set a pattern for best corporate governance
for the benefit of the wide spectrum of client companies.
Taiwan is facing the threat of systemic risk in financial
markets. Universal standards for corporate governance
of financial institutions have to be established
to cope with that threat. This article addresses some
important issues and concepts in the governance of
multinational financial institutions.
An important task for Taiwan’s financial supervisors
and regulators is to ensure that incentives exist to
encourage senior bank management to adopt good regulatory
practices that approximate the economic risk
exposure of the financial institution. An analysis of
corporate governance within framework of international
financial markets is attempted to find out how the stanstandards
for corporate governance of financial institutions.