Corporate governance refers to the structures and processes for managing and controlling companies, protecting shareholder interests.

Asian Governance Challenges

IssueWhere
Chaebol dominanceSouth Korea
SOE opacityChina
Cross-shareholdingsJapan
Promoter controlIndia
Family ownershipSoutheast Asia

Japan's Governance Revolution

Since 2014, Japan has transformed corporate governance:

  • Stewardship Code (2014): institutional investors must engage
  • Corporate Governance Code (2015): board independence, shareholder returns
  • TSE reform (2023): pressuring companies with P/B <1 to improve

Result: Japanese stocks hit all-time highs in 2024, partly driven by governance improvements.

Korea's Value-Up Program

Following Japan's success, Korea launched its own 'Value-Up' program in 2024 to address the 'Korea discount' caused by governance concerns.