The Asian Corporate Governance Association (ACGA) released its latest Corporate Governance Watch report on Dec. 13, ranking Taiwan third, along with Singapore, among the 12 Asia-Pacific markets this year, Australia and Japan. Taiwan moved up a notch from the previous rating published in 2020, with an overall score of 0. 6 points to 62. 8, the highest in the country.
In the biggest shake-up in ratings since the system began compiling the reports in 2003, Japan fell from fifth place in 2020 to second place this year, while Hong Kong fell from second to sixth place.
Other markets that gained ground were India, which climbed to sixth place alongside Hong Kong, and South Korea, which climbed one spot to eighth. Thailand dropped one position to ninth, while China, the Philippines and Indonesia remained unchanged at the back of the table. , in 10th, 11th and 12th places respectively.
Corporate governance, the criteria of conduct and procedures for managing a company, provides the legal framework for effective operations and serves as a way for corporations to develop their competitiveness and maximize shareholder value. Well-designed corporate governance creates a strong environment for businesses to thrive and pursue sustainable development.
This year’s report covers seven categories: governance and public governance, regulators, corporate governance rules, index companies, investors, auditors and audit regulators, as well as civil society and the media.
Taiwan ranked second in three categories — governance and public governance, regulators and auditors and audit regulators. It also showed significant progress in corporate governance rules, which the ACGA attributed to Taiwan in 2021 setting up a new commercial court to handle corporate and securities-related disputes, as well as this year lowering the threshold for reporting substantial shareholding from 10 percent to 5 percent.
The agreement also praised Taiwan for reviewing its corporate governance plans after the Financial Supervisory Commission (FSC) introduced a corporate governance strategy in 2013, launching the Roadmap last year for the sustainable progress of indexed corporations on the Taiwan Stock Exchange and Taipei Stock Exchange and this year. action plan. “
However, Taiwan scores low in the categories of investors, civil society, and media. In the first case, Taiwan scored only 40 issues compared to Australia’s 69, while in civil society and media it scored 62 issues compared to Australia’s 82.
The FSC attributed Taiwan’s low score in the investor category to institutional investors’ low engagement with corporations compared to other markets. The commission also said that Taiwan’s poor functionality in civil society and the media showed that there was room for improvement, for example through the sale of effective corporate investments. governance or reporting and explaining corporate scandals.
It’s not that the local media have failed in their duty to monitor publicly traded corporations. Conversely, many indexed companies simply don’t engage with the media, and some even refuse to report on their companies. For example, before the COVID-19 pandemic, news sleuths could simply attend public meetings on corporate earnings and interact with executives, but this has been replaced as corporations moved to online meetings and scaled back their meetings. interactions with the media.
If things continue like this, it would be difficult for Taiwan to make gains in that category. After all, firms’ openness in their interactions with the media is as important as their financial transparency with shareholders.
The possibilities of making Taiwan a healthy market in terms of corporate governance require only the efforts of the public sector, but also the contribution of the personal sector.