Exploring Corporate Governance Around the World

By Allison Garrett, Senior Vice President for Academic Affairs at Oklahoma Christian University

Thursday, April 27, 2006

Institutional Shareholder Services 2006 Global Investor Study

Institutional Shareholder Services has just issued the 2006 ISS Global Investor Study. The study is a review of how institutional shareholders view and participate in corporate governance around the world. The 100-page study covers 18 countries. The theme of this year's study is that views of corporate governance are shifting from mere compliance with laws and listing standards, to a business imperative for many companies. Corporate governance has come to be viewed as a differentiator among firms. Good governance practices provide a competitive advantage for both firms and markets.

Those of you who have a particular interest in governance practices in China will want to review the special report on China at the end of the study. The special report notes that there are "huge corporate governance risks" in China. Among the special problems faced by investors in China are the close relationships among issuers and governmental agencies through state-owned enterprises and closely linked ownership structures.

China has taken baby steps to reform governance practices in recent years. Among them are reforms regarding board independence, pay and disclosure. China's capital markets will be hampered, though, until additional changes occur.

1 comment:

ChinaLawBlog said...

Nice post. I know too much to invest in the Chinese stock market. I think China as a country will do great, but until its corporate governance gets cleaned up, I will stay away from the market. China's stock market was one of the world's ten worst over the last five years, which is pretty incredibly when you consider that their economy was one of the world's strongest during that very same period.

China Law