The authors of the study suggest that understanding the ownership structures in Asia is critical to ensuring the development of effective corporate governance standards. Concentrated ownership structures are a common feature in Asian economies, according to the survey, while dispersed structures are less typical. However, there are differences between different markets.
The OECD report shows that Vietnam and China have high levels of state ownership while India, Indonesia and Korea, for example, have family ownership structures. Bangladesh shares are also are owned by individual shareholders, controlling families, or members of the public rather than institutional investors or other companies.
Stewardship Codes reach Asia
The research highlights the developments taking place in several countries for institutional investors to take more responsibilities in respect of their share ownership. Chinese Taipei (Taiwan), Malaysia and Pakistan have introduced stewardship codes, require disclosure of voting and are required to vote according to the instructions of the beneficial owners. Discussions are ongoing regarding developing stewardship codes in Korea, the Philippines, Singapore and Thailand.
The legal framework that relates to corporate governance is primarily through company acts or enterprise acts and all the countries have corporate governance codes or principles that relate to listed companies and in Hong Kong and Taiwan these are enacted through the country’s listing rules. The corporate governance codes are predominantly comply or explain but there is a number of binding codes too.
The financial regulators in the countries are a mixture of self funded and publicly funded regulators and there are a large number of other organisations in the countries that also promote corporate governance. Most of the stock exchanges in the countries – 71% – are self funding . In just 25% of cases the exchanges are listed on themselves.
In respect of board composition the OECD found that all the companies surveyed require independent directors on boards but only Pakistan, Mongolia and Bangladesh require separation of the chief executive and chairman position. In Indonesia there is a separation under its dual board system.
Low female participation
There is generally low female participation in senior management roles and on boards in Asia, according to research carried out by the Credit Suisse Research Institute published in 2016 and included in the OECD report. Malaysia had the greatest percentage of women on boards- 14%, with 18% in senior management. The country had set a target of having 30% of women on boards by 2016.
Thailand then the Philippines have the largest percentage of senior female executives: Thailand – 28% (12% on boards), Philippines 25% (11% on boards). Korea has the lowest levels of female participation- with the percentage of women on boards at 4% and in senior management, 2%.