The concept, corporate governance, has been emerging since the early 1970’s in response to the perceived lack of effective board oversight that contributed to the poor performance problems. In 1997 there were numbers of scandals and corruption within Asian financial markets that led to severe Asian financial crises. Inadequate corporate governance system has been concluded the major reason suffering the serious consequences on the Asian financial crises. The impact arising from Enron and Corporate America has now put the issue under a spotlight. Therefore, the attention to enhance corporate governance is being emphasized hence after. Furthermore, OECD, in its ministerial meeting as of 1998, also pointed out the lack of corporate governance has been one of the root causes of the recent Asian financial crisis.
The Asian financial crises provide lessons for Taiwan to esteem the importance of corporate governance. Knowing that inadequate corporate governance is identified as the key fact that Asian corporations could not build the competition in world financial markets, Taiwan securities regulator (Financial Supervisory Commission, or FSC) has tried its best to emphasize the importance of advocating corporate governance to public companies since 1998. It believes that greater transparency as to corporate governance is needed for enterprises to control risk. Securities and Futures Institute (SFI), founded as a quasi-public organization for research, training and protecting investors, together with Taiwan Stock Exchange (TWSE), Taiwan’s computerized over-the-counter market (known as Taipei Exchange, TPEx), and Taiwan Corporate Governance Association (TCGA), introduce the system of independent directors, audit committee, etc. They also established and promoted “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” in Taiwan. To strengthen the legal base in the field of corporate governance, Taiwan amended Company Law and Securities & Exchange Act. In the future, all said organizations will be continue to put their efforts in helping corporations by adopting best practice as infrastructure tools of corporate governance.
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