Pacific Perspective
Pacific Perspective
Asia critiques U.S.
corporate governanceWorms turning, shoes on other feet -- such were the images used in discussions at the conference on corporate governance which I hosted earlier this month in Tokyo.
The conference, part of a series of three held under the auspices of the Asia Pacific Economic Cooperation (APEC) forum, focused on the progress made on corporate governance in Asia in the aftermath of Asia's financial crisis of 1997-98.
Co-sponsors included the University of Hawaii's APEC Study Center and our Asia Pacific Financial Markets Research Center.
Scholars at the conference addressed the governance lapses that have prolonged Japan's decade-long financial malaise; the role of shareholder activism in reforming governance in Korea's chaebols; the influence of the crisis in dispersing the ownership structures of Thai firms; and the impact of local public sector directors on the professionalism of corporate boards of directors in China.
Korea won high marks for its efforts at financial sector reform, and there was optimism that conditions may finally be in place for Japan to show progress.
Less developed areas of Asia seemed to have more of a way to go to make a quantum improvement in governance. It was with both concern and a not inconsiderable sense of irony that conversations returned repeatedly to the United States' current governance problems.
Participants recalled being lectured by America five years ago, and expressed some satisfaction that the U.S. brand of capitalism has been shown not to be immune from deception, greed and cronyism.
The conferees recognized that these problems emerged in America in the wake of the Internet bubble, just as Japan's and Asia's crisis and governance difficulties followed financial bubbles there.
Still, the group felt that the Anglo-American breed of capitalism, with its emphasis on the self-interest of the individual and on a Darwinistic process of corporate competition, was particularly vulnerable to temptation and abuse of the principles of sound governance.
Whatever the root causes of the current problems, conference participants were unanimous in their concern that the United States needs to rectify its governance processes in short order.
An ill wind blowing through America's $11 trillion-plus economy bodes no good for Asia's exports, the leading edge of the region's recovery since 1997-98.
David McClain is dean and First Hawaiian Bank Distinguished Professor of Leadership and Management at the University of Hawaii College of Business Administration.