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Dr Ali Yaftian, Associate Professor Victoria Wise and Dr Chatrudee Jongsureyapart (Thailand) have a paper forthcoming in which they which examine corporate governance in Thailand. The study sample was selected from firms listed on the Stock Exchange of Thailand operating in the Bangkok region.
The international corporate governance system assumes a separation of ownership and control, a questionable assumption in the Thai context. Since the Asian financial crisis of 1997, all listed companies, especially family-owned businesses, have made generally poor information disclosure about related party transactions. This could be improved as part of future moves to promote and enhance corporate governance. More consideration could be given to the use of outside directors, a powerful tool normally used in Western cultures. The purpose is that outside directors can help monitor management and family owners. However, this could have limited success as Thai people are non-confrontational and group-orientated. Many boards become so-called ‘rubber-stamp’ boards, not because directors are unaware or disinterested in their roles an duties, but because they are being considerate and respectful of the owners’ decisions.
The results presented in the paper show that corporate governance has been improving since the Asian financial crisis, and that outside directors and professional organizations are playing leading roles in this process. Overall, the research reported in this paper suggests that the Asian financial crisis forced Thai companies to improve corporate governance structures, and that regulatory and professional organizations have assumed leading roles in this evolving process.
Better corporate governance has resulted from improved internal mechanisms and enhanced accounting standards, improved information disclosure and compliance with auditing standards. New and updated rules and laws, and increased regulation and monitoring or compliance are at the forefront of the improved corporate governance regime.