The Asian Financial Crisis at the
turn of the 20th century has exposed the weakness in
corporate governance across many publicly listed companies
in East Asia. Many governments and international organizations
such as the World Bank and the International Monetary
Fund have made efforts to reform corporate governance.
Years have passed. The effects of these reforms remain
controversial. Debates on what cause the corporate governance
practices and what sorts of governance structures are
best suited for Asian corporations continue.
Although China was sheltered from the
Crisis, its companies have been even more severely plagued
by weak corporate governance problems. The focal point
of China's economic reform has been the privatization
of state-owned enterprises through public listing in
its two young stock markets. However, many of these
publicly listed companies suffer from the entrenchment
problems of the management and bureaucrats. Not only
does the weak governance system in the country impair
companies' ability to raise new funds, it also creates
barriers for companies to trade and build networks with
overseas business partners. With the accession to World
Trade Organization, improving the governance and the
credibility of its state-owned and private enterprises
is an urgent issue to be resolved before they are qualified
for competition in world markets.
Debates of the corporate governance
problems continue in Asia and China. We view that one
important reason why these issues remain unresolved
is that we lack objective guidance supported by credible
research and independent research agencies, and that
the few existing credible research is out of reach to
business communities and policy-making bodies. Removing
barriers against producing high quality independent
research in corporate governance and enhancing communication
between researchers and the public thus motivate the
setting up of the Center for Institutions and Governance
at the Chinese University of Hong Kong.
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