Survey of Corporate Governance Practices in Indonesia, Thailand and Korea

Abstract

Poor corporate governance is viewed as one of the structural weaknesses responsible for the outbreak of the Asian crisis in late 1997. Controlling family owners could pursue private interests with relative ease often at the expense of minority shareholders and the profits of these firms. In order to address these problems, a high priority has been given to corporate governance reform in post-crisis policy packages. There is little doubt that the reform efforts should improve corporate governance by preventing outrageously abusive behavior by controlling owners. Many, however, observe that the changes introduced are rather cosmetic, and embedded institutional or socio-cultural norms and values also limit the effectiveness of the newly instituted mechanisms. These critics believe that the corporate governance reform measures pushed largely along the Anglo-American model will take a long time, if at all, to take root in the local economies. Some also suggest that, though shareholders should have the strongest incentives to monitor their firms, other stakeholders — employees and creditor banks, particularly — can also play a useful role in corporate governance.