Are East Asian Companies Benefiting from Western Board Practices?

Since the crisis, Asian countries have strived to introduce corporate governance codes, directing companies how to best improve their corporate governance practices. However, these codes have not been universally accepted by Asian companies. This study examines the adoption of major board-related corporate governance code recommendations by large non-financial companies in seven East Asian nations and investigates whether improvements in these board governance mechanisms have been associated with increased operating performance and market value. The results indicate that companies from Hong Kong, Indonesia, Malaysia, Singapore, South Korea and Thailand, but not Taiwan, have been active in improving their board governance since the crisis. At the firm-level, family-owned companies and companies with concentrated ownership started with worse board governance and have been least likely to improve their board governance since the crisis. Splitting of the positions of Chairman and CEO, creation of audit and nomination committees and improvements in overall board governance are found to have a positive relationship with subsequent operating performance and/or market value