ABSTRACT
Literature discussing the recent Asian financial crisis points to several competing hypotheses on the causes of the financial turmoil that beset countries in the region. The often-cited reasons for the crisis include macroeconomic mismanagement; regulatory and supervisory weaknesses in the financial sector, specifically the banking system; and breakdowns in the corporate governance system. The importance of corporate governance is highlighted by Jim Wolfensohn, the World Bank president, who stated that ‘the proper governance of companies will become as crucial to the world economy as the proper governing of countries’. Furthermore, in the case of the Philippines, Lamberte (1999) asserts that there are three main factors that contributed to the vulnerability of the Philippine economy to the Asian financial crisis: inappropriate exchange rate policy, inadequate prudential regulations for banks, and poor corporate governance. Consequently, much of the current focus of international financial organisations, international coalitions and financial and economic experts is on the corporate governance systems present in these various Asian countries. In particular, there are calls for improvements in the corporate governance practices and structures as a means of restoring financial stability and growth in the Asian region (Symposium Report on Corporate Governance in APEC 1998). The crucial role of improved corporate governance in assisting affected countries to rebuild competitiveness, restore investor confidence and promote sustainable economic growth is emphasised by the fact that the World Bank and the IMF are currently implementing corporate governance reform in these still ailing markets (Dubiel 1999).
