Corporate Governance In Asia Becomes Focus For Investor Concern
When accounting and corporate-governance problems started to erupt in the U.S. and Europe a few years ago, many investors figured it was good news for Asia. After all, the region's companies would no longer look so slapdash when compared with Western counterparts.
Instead, the opposite happened, as investors all around the world began to look more closely at how companies everywhere are managed. "The last couple of years in America have probably increased the focus on corporate governance in Asia," says David Webb, a Hong Kong shareholder activist and publisher of webb-site.com. While that has helped push through some reforms, the region's companies still lag well behind in many areas.
A few key changes could do wonders for Asian corporate governance, investors say. Some require revisions or more in regulation; others require changes in attitude from companies as well as shareholders. Whatever kind of change is involved, companies would reap benefits.
"If you look at the reward and punishment for corporate governance in bull and bear cycles, good corporate governance is rewarded," says Frances Dydasco, a portfolio manager with T. Rowe Price in Singapore. "Although all stocks run up, stocks with poor corporate governance do often get left behind."
The chief problem, many investors say, is the concentration of ownership at Asian companies. Two-thirds of listed Asian companies are controlled by a single shareholder, compared with 3% in the U.S., according to the World Bank. That means it is easier for a single shareholder, very often the chairman, to make decisions aligned more with his personal financial interests than with those of a company.
Take the Kao family's Boto International Holdings, a Hong Kong-listed company that last year sold the bulk of its highly profitable artificial Christmas-tree business for US$136 million to Greenland International Holdings, which is 75%-owned by private-equity firm Carlyle Group.
While minority shareholders won some concessions largely because of a protest led by Mr. Webb, they couldn't stop the deal. Although Chairman Michael Kao didn't vote on the deal, directors with significant shareholdings who were linked to the chairman -- such as his nephew -- did vote. The deal squeaked through, with shareholders voting 53% to 47% to approve it.
Investors in Boto got 26 Hong Kong cents (3.3 U.S. cents) a share, significantly less than many minority shareholders felt they should get. The family maintained it was a good deal for investors, who got to keep 25% of the Christmas-tree operation plus the unprofitable computer-animation business run by the chairman's son. Today, the company, now called IMI Global Holdings, trades at about one quarter the level it did before announcement of the deal, after adjusting for a reverse stock split.
"You're going to have this issue as long as there are owner-managed firms," says Ms. Dydasco of T. Rowe Price. Even if large chunks of the company are traded on a stock market, owners "believe, 'This is my money.' That's the mentality." She points out that early titans of U.S. industry, such as the Carnegies and the Rockefellers, behaved the same way.
Mr. Webb believes that granting shareholders the right to take companies to court in class-action suits would be the best way to boost corporate governance around Asia. He would combine that step with contingency fees, where minority shareholders can negotiate incentive-based payments with lawyers, such as paying a nominal fee, or no fee at all, if the lawyer loses the case. Such payments aren't allowed in many Asian jurisdictions, including Hong Kong.
Next on his wish list: a rule mandating that independent directors are elected only by independent shareholders, with management and controlling shareholders prohibited from voting. He would still favor allowing company boards to nominate candidates, as is the case now.
WHO RUNS THINGS BEST?
Below, Asian stock markets, ranked by how well companies there govern themselves overall (a score of 10 is best), and year-to-date performance of their benchmark stock-market index, in local-currency terms.
SCORING CATEGORY
RANK COUNTRY OVERALL REGULATIONS ENFORCEMENT STOCK-MARKET PERFORMANCE YEAR TO DATE
1 Singapore 7.7 8.5 7.5 Straits Times 28%
2 Hong Kong 7.3 8 6.5 Hang Seng 31
3 India 6.6 8 6 Bombay SE 30 62
4 Taiwan 5.8 7 5 Weighted Average 30
5 South Korea 5.5 7 3.5 Kospi 29
6 Malaysia 5.5 9 3.5 Kuala Lumpur Comp. 19
7 Thailand 4.6 7.5 3 Bangkok S.E.T. 97
8 China 4.3 5 4 Shanghai SE Comp. 7
Sources: CLSA; WSJ Market Data Group
Mr. Webb also believes in one share, one vote. In many shareholder meetings around Asia, votes are taken by a show of hands, meaning a shareholder with millions of shares carries no more weight than a shareholder with five shares. In annual meetings, executives sometimes pack the room with employees who own only a handful of shares each in order to stack the vote.
In his paper, "A Road Map for Corporate Governance in East Asia," Low Chee Keong of the Chinese University of Hong Kong lays out a few proposals. One is to toughen requirements for company directorships, which are often viewed as rewards for company service or friendships with executives. In fact, if the company is sued, the less qualified a director, the easier it is for him or her to get off scot-free. A successful suit in many parts of Asia requires establishing gross negligence, which is possible only if the director was knowledgeable and experienced enough to recognize improper behavior. Such an approach rewards the selection of less competent directors, Mr. Low writes.
However, changes to the rulebooks aren't enough to improve corporate governance. CLSA Asia Pacific, an investment bank, notes that on paper, Malaysia has some of the toughest corporate-governance regulations in Asia; the bank rates it a nine out of a possible 10, higher than Hong Kong and Singapore. But in terms of enforcement, it rates Malaysia 3.5, lower than China.
Mr. Low, like Mr. Webb, favors the removal of obstacles for shareholder lawsuits, including class-action suits. "Reforms are urgently required to facilitate shareholder activism and to empower shareholders, if the capital markets in East Asia are to avoid the perception of being risky places to invest," he writes.
It's hard to think about risks in a year when benchmark indexes for Asian-Pacific markets have risen significantly, a few by more than 50%. But think how much better they could be doing if more corporate-governance risk was eliminated. After all, despite the run-ups, Asian stocks, excluding Japan, still trade at about 15 times next year's earnings, compared with 19 times in the U.S.
亚洲公司治理观念需要革新
几年前，当美国和欧洲公司纷纷出现会计及企业治理危机的时候，许多投资者以为这对亚洲来说是个好消息，毕竟，这让亚洲公司至少看上去不再显得那么粗糙了。
可是当全球投资者开始更加仔细地审视其他地区的公司是如何管理的时候，他们发现事实恰恰相反。香港股东权益活动家、webb-site.com网站出版人韦伯(David Webb)认为，过去几年美国发生的问题让人们更加关注亚洲企业的治理问题。尽管这种关注促使了某些改革措施的出现，但亚洲公司在许多方面仍远落后于许多其他地区的公司。
很多投资者认为，只要在若干重大领域进行革新就能取得事半功倍的效果。某些情况下需要作出一些调整或是制定更多监管条例。其他情况下则需要公司和股东们改变观念。无论是何种改变，公司都将从中得到裨益。
新加坡T. Rowe Price的一位投资经理戴德斯科(Frances Dydasco)称，只要回顾一下熊市和牛市中企业治理好坏的得与失，人们就会发现，好的企业治理总是会获得市场的回报。他说，即便所有的股票都涨了，但企业治理差的公司股票通常落后。
许多投资者认为，亚洲公司的主要问题就是股权集中。根据世界银行(World Bank)统计的数据，亚洲三分之二的上市公司是由单一大股东控制，而在美国这个比例仅为3%。这意味著，这个唯一的股东--通常是董事长--所做的决策，相对公司的利益而言，更容易受到个人经济利益的影响。
以高氏(Kao)家族的宝途集团国际有限公司(Boto International Holdings Ltd., H.BOT, 简称：宝途集团)为例。宝途集团是一间香港上市公司，该公司去年以1.36亿美元的价格将利润颇高的人造圣诞树业务的大部分出售给由私人控股公司凯雷投资集团(Carlyle Group)持股75%的Greenland International Holdings。
尽管宝途集团的小股东赢得了大股东的一定程度的让步（主要是由于以韦伯为首的一些人的抗议），但小股东们仍不能阻止公司将出售圣诞树业务。尽管董事会主席高长昌(Michael Kao)并未直接参与投票，但与他有关联的持有较大股权的董事，如他的侄子等，却参加了投票。最后，交易被以53%比47%勉强得到通过。
宝途集团投资者每股获得0.26港元（合3.3美分），大大低于许多小股东认为他们应得的报酬。高氏坚持交易对投资者有利。该股股东现持有25%的圣诞树业务和不赢利的电脑动画业务，由高长昌的儿子管理。该公司现名IMI Global Holdings，经并股调整后的股票价格仅为交易公告发布前的四分之一。
韦伯认为，授予股东集体起诉公司的权利是提高亚洲企业管制力度的最佳途径。他提议再加上一种应急酬金办法：即小股东与律师协商，在官司打赢之前只支付给律师象征性的服务费，如果输了官司就根本不支付费用。根据目前许多亚洲国家的司法制度，其中包括香港，这种付费方式是不被允许的。
韦伯的另一个心愿就是，规定独立董事只能由独立股东选举产生，禁止管理层和控股股东参加投票。他仍倾向于让公司董事会提名候选人，像现在的状况一样。
韦伯仍坚持“一股一票”的观点。在亚洲许多股东会议中，投票仍通过举手表决，这意味著持有数百万股票的股东与持有5只股票的股东持有同样的份量。
香港中文大学(Chinese University of Hong Kong)的Low Chee Keong在一篇论文中提出了几点建议。一是严格对董事制度的管理。董事制度通常被视为对公司服务或与管理人士私交的奖赏，这使得许多能力不够的人当选为董事。
今年，亚太地区股票市场的指数大幅上扬，有些股指的涨幅甚至超过50%，在这样一片欢腾的景象中是很难做到考虑风险的问题。但是，如果更多的企业管制风险被根除，那么这些股市还将表现更佳。毕竟，根据明年的收益预期，除日本以外的亚洲股市的本益比约为15倍，而美国为19倍。
