Hong Kong Slips In Regional Corporate Governance Survey

by Mary Swire, for LawAndTax-News.com, Hong Kong

23 September 2004

Following the completion of a series of regional studies carried out by Standard & Poor's Governance Services and the Corporate Governance & Financial Reporting Centre (CGFRC) at the National University of Singapore, it has emerged that Hong Kong has slipped behind Singapore and Malaysia in terms of corporate governance.

Examining the firms listed on the stock exchanges of Hong Kong, Indonesia, Malaysia, Singapore and Thailand for a series of reports published over the course of this year, S&P found that the 33 Hang Seng-listed companies studied scored an average of 43 corporate governance points out of a maximum of 140, ranking well below Sinagapore's average ranking of 81, and Malaysia's 65. The firms listed on the Thai and Indonesian stock exchanges achieved an average score of 38 and 24 respectively.

Offering a possible explanation for the relatively poor results, Associate Professor Mak Yuen Teen, vice dean of the NUS Business School and co-director of CGFRC observed that:

"The data from the study showed that independence of the boards of directors for most companies on the HSI is very low."

According to the study results, the standards of disclosure in Hong Kong regarding subjects such as the renumeration of company directors were also found to be quite poor.

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