Corporate governance improves at Asian firms

Corporate governance improves at Asian firms

Deutsche Press Agentur, Singapore

Asian financial institutions have improved their corporate governance in recent years, more from a desire to comply with regulations than to capitalize on its strategic advantages, a PricewaterhouseCoopers (PwC) study said on Friday.

The global study surveyed more than 200 senior executives, 25 percent of whom were from the Asia-Pacific region.

A critical test of good governance is the nature of dialogue institutions have with their key stakeholders, PwC said.

Its Asian findings published in The Business Times show firms give auditors and regulators high priority when it comes to communications, rather than shareholders, customers and employees.

"Good governance is about anticipating the need of critical stakeholders, managing their expectations and communicating actively with them," PWC said.

Sixty-three percent of the Asian respondents said their internal culture has become more focused on compliance and governance. "It appears that change has occurred by the desire to comply with regulations rather than to improve the institution's management tools," PWC said.

The study also found that 67 percent of financial institutions in the region indicated they will increase governance-related resources in the next 12 months.

About 61 percent expect to expand their risk management functions and 57 percent their compliance functions.

The top three priorities of board members are ensuring adequate internal controls, questioning and refining company strategy and ensuring compliance with regulators, PwC found.

"What is needed is a new and integrated approach to governance that does not limit an institution's ambitions to avoiding trouble with regulators, but strives to improve the quality of its management and controls and to reap the benefits," said Dominic Nixon, a member of PwC's financial services advisory leadership team.