Public Sector Transparency and Corporate Accounting Practices in Asia

Corporate governance in Asia has been in the spotlight since the Asian financial crisis in 1997. Corporate accounting practices have in particular drawn heavy scrutiny, and there is now a consensus among experts that poor accounting practices in Asian firms were a leading factor contributing to the crisis (Gelos and Wei 2002; Johnson et al. 2000a; Vishwanath and Kaufmann 1999). Poor accounting practices led to excessive exposure to debt, weak protection of the shareholders’ interests, and distortions in resource allocation in the economy (ADB 2001; Mitton 2002).