The Philippine Online Chronicles

This is a press release

“Corporate governance in the country has improved significantly as implied by the increase in the corporate governance scorecard of listed companies from 54 percent in 2006 to 73 percent in 2009,” said Jonathan Juan Moreno, President and CEO of the Institute of Corporate Directors, in a training seminar that highlighted the global issues on corporate governance for the media recently organized by the CFA Society of the Philippines (CFA Philippines).

According to a study conducted in 2006, the Philippines was third to the last among nine East Asian economies in terms of corporate governance based on investor perception. This, despite ranking the second highest in terms of laws and regulations. In another study conducted in 2007, the Philippines ranked 10^th out of 11 Asian countries in terms of corporate governance.

CFA Philippines brought together key speakers from the United States and Asia led by Matthew Orsagh, CFA, director of Capital Markets Policy, CFA Institute, based in New York and Katrina Tai, director of Capital Markets Policy, CFA Institute, based in Hong Kong who shared global insights on corporate governance issues and international best practices. Jonathan Juan Moreno, president and CEO of the Institute of Corporate Directors, also joined them to provide a local stance on how corporate governance affects the finance industry in the Philippines.

“CFA Philippines believes that good corporate governance practices are essential in promoting accountability among corporate management. The adoption of good corporate governance practices will also help companies gain investor confidence, improving their ability to raise capital,” said April Lynn Lee-Tan, CFA Philippines president.

Orsagh emphasized the correlation of corporate governance and stock returns. “In a study conducted in 2003, an investment strategy in the 1990s that bought companies with shareholder-friendly provisions and sold those with weak shareholder rights earned excess returns of 8.5 percent per year,” he shares.

Orsagh and Tai recommended an increase in the number of independent directors to improve the protection of minority shareholders in Asia Pacific including the Philippines.

Despite the improvement in corporate governance in the country, Moreno believes that more work should be done. “We must capacitate regulators to better enforce corporate governance rules.  We must also adopt a mechanism that will distinguish corporate governance performers. The public must also take action and call the attention of erring companies. Improvement has to be worked on not only by the corporations but the entire country, including the public and the government.”

CFA Institute has released numerous reports and manuals advocating for corporate governance and market integrity, such as The Corporate Governance of Listed Companies: A Manual for Investors, which is created by investors for investors and provides insights into how companies define governance structure. Other publications that focus on corporate governance in the Asia Pacific region include Related-Party Transactions: Cautionary Tales for Investors in Asia, and Independent Non-Executive Directors: A Search for True Independence in Asia.

About CFA Institute

CFA Institute is the global association for investment professionals. It administers the CFA^®(Chartered Financial Analyst^®) and (CIPM Certificate in Investment Performance Measurement) curriculum and exam programs worldwide; publishes research; conducts professional development programs; and sets voluntary, ethics-based professional and performance-reporting standards for the investment industry. CFA Institute has more than 101,000 members, who include the world’s more than 89,000 CFA charterholders, as well as 135 affiliated professional societies in 58 countries and territories. More information may be found at www.cfainstitute.org.