Executive Chairman of the Kuala Lumpur Stock Exchange (KLSE), Dato' Mohd Azlan Hashim said that clear and structured rules alone cannot promise sustainable standards of corporate governance; what is important is the creation and maintenance of a strong culture of ethics, honesty and good sense, which for the most part is voluntary behaviour.
"We know that regulators to a large extent set the standards, advisors including auditors advice public listed companies to see that those standards are met, if not exceeded. The creation of a culture that subscribes to and adheres to corporate governance best practices, that being voluntary behaviour, lies mostly with the board of directors and senior management," Mohd Azlan said.
Mohd Azlan was speaking at the launch of the survey report on the joint KLSE - PricewaterhouseCoopers (PwC) Corporate Governance Survey 2002 at the KLSE this afternoon. The survey report was launched by Deputy Minister of Finance 1, YB. Dato' Dr. Hj. Shafie Mohd Salleh. The KLSE-PwC Corporate Governance Survey 2002 is a follow up to the first joint survey conducted in 1998.
The KLSE-PwC Corporate Governance Survey 2002 gauged key stakeholder perception on Malaysian corporate governance standards. The Survey also reviewed corporate governance practices in Malaysia, in accordance with recommendations and guidelines prescribed in the Malaysian Code of Corporate Governance and the KLSE Listing Requirements.
Results from the survey already highlights the positive development in Corporate Malaysia, with regards to corporate governance practices. Presenting the survey results at the event, Executive Chairman of PricewaterhouseCoopers, YM. Raja Datuk Arshad Tun Uda said that compared to the 1988 Survey, the 2002 Survey revealed that the corporate governance gap between Malaysia and other Asia Pacific jurisdictions like Singapore, Hong Kong and Australia has narrowed.
"All three target groups- the Institutional groups, the Independent Non-Executive Directors and the Public Listed Companies confirm that the corporate governance regime in Malaysia has improved.
"Institutional groups unanimously indicated that they would pay at least a 10% premium to companies with excellent corporate governance practices. In addition, a significant proportion of Public Listed Companies indicated that with greater regulatory focus on corporate reporting, they have not only complied but exceeded the minimum reporting requirements in annual reports," Raja Arshad said.
The survey indicates that the annual report remains the most effective communication channel in communicating the company's profile, financial results and corporate developments. The KLSE website, www.klse.com.my is regarded as the next most effective medium in communicating corporate information.
Executive Chairman of KLSE, Mohd Azlan further said that a competitive economy is represented by the success of its various sectors in developing top performing companies.
"It is essential that the regulations and requirements set, ensures that industry and market participants continue to contribute to the sustainable growth and investibility of the business sector, and hence the economy."
As regulators, KLSE continues to periodically review rules and requirements that govern the market, the conduct and roles of market participants and guidelines on corporate best practices.
On the role of the external auditor, Mohd Azlan said that the auditors are increasingly expected to perform their role and to exercise more vigilance and continue to provide assurance that financial statements are fairly presented for shareholders.
With the full implementation of a full disclosure based regime, directors have an expanded responsibility in ensuring adequate transparency and timely dissemination of corporate information.
"Whilst there are rules and guidelines prescribed for the role of directors, it is very much the voluntary good behaviour and credibility of the board which will create a good governance culture for the entire organisation and its partners," Mohd Azlan said.
