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ECN 802 (9)
Lecture 4

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Ryerson University
ECN 802
Sabrina Malik

Chapter 4 Structural Transformation BusinessCorporate governance shiftoIn Asia improvement in corporate governance involves recognizing the interests of minority shareholder because minorities of the shareholders dont have control over the policies of the company because they arent the majoritys interestsoOutside governance media etcoAppointment of outside directorsBeginning to resemble western economiesoSouth KoreaLaws enacted to increase the role of outside directors audit committeeDiscuss with reference to USA Also for BanksSingapore Malaysia and Thailand at least 13 of the members of the Board were required to be from outside the companyoBetter accountabilityDirectors are holding liability insuranceIndonesia the progress is slowerInterest groups have become stronger after 1997 in South Korea and Malaysia to protect the rights of minority shareholdersGovernance from outside directors will always remain a challenge in asiaFamily domination of shareholdersDominant shareholdersoDominant shareholders attitude Is also changingTo attract foreign partners in a global economy they have to meet with global standards on disclosure of informationOther practisesChange in strategyInstead of empire buildingInvolving professional management in decision making hands off approachPioneers of changeoAyala group from PhilippinesPrevious strategy cross holding group weaker companies being supported by stronger companiesAyala is changing independent companiesNew equity issued to foreign companies to finance new venturesoHutchinson whampoaHong KongShipping and port facilitiesAsset sales to strategic investorsoNew modeEmphasis on profit maximizationFocussing on core businessTo compete internationally in terms of quality and technologyNew mode of actionoHigher dividend payouts to retain foreign shareholders 35 compared to 15 for the US marketoGlobal competivenessNew entrants Thailands Charoen Pokphand high value added processed foods
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