Wednesday, 6 June 2012

Corporate Governance, a glass half full?

In The Edge of June 4, 2012 the results are presented of the 2Q/2012 Vistage - MIER CEO Confidence Index Survey. Membership comprises companies with sales between RM 5 million and 1 billion.

Question 16: Is corporate governance (broadly defined as quality of independent non-executive directors, effectiveness of audit committees, high standard of internal controls and risk management, timeliness and transparency in disclosure of information, etc) adequately practiced in the public-listed entities in this country?

Yes: 32%
No: 68%
I guess that if this survey was held 10 years ago, then the result would have been worse.

On the other hand, only 32% answering "Yes" is not exactly a lot. The SC and BM have put a lot of effort in promoting good corporate governance, the latest 2012 code can be found here.

But, [1] changes will take a long time, [2] there is still a lot of box ticking (even companies with really bad CG practices still have chapters how good they behave themselves), [3] the CG standards itself are voluntarily (companies are only required to report on their compliance).

I am therefore for a strong increase in enforcement, in combination with promoting good CG.

Another, worrisome, question from the same survey is about crime perception in Malaysia.

Question 15: From your experience and in your conversations with your family, friends and business associates, do you believe or feel that the crime rate in the country has:

Come down: 14%
Remained the same: 53%
Gone up: 33%

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