The following article explains how the effectiveness of Spain and Taiwans corporate governance can be analysed and compared, it also addresses the possibility of using Spain's corporate governance in Taiwan.
How to Compare The effectiveness of Spain and Taiwan’s Corporate Governance Mechanisms
The effectiveness of the Taiwanese and Spanish mechanisms of corporate governance can be compared through their analysis with regards to their over-arching principles of fairness, transparency, accountability and responsibility. Furthermore, all such principles should be analysed in respect to the main beneficiaries who are the shareholders.
The first principle is:
Fairness: This principle analyses if all shareholders have a say in the affairs of the company respective to their percentage ownership of the company. This is often accomplished through voting. Moreover, it also entails avoiding bias and discrimination in making decisions.
The second principle is:
Transparency: This principle analyses if the company timely and accurately discloses on all material information with high quality standards. This can be achieved with an independent external auditor who evaluates what is disclosed is true and fair. Such a principle allows those in charge to avoid fraud.
The third principle is:
Accountability: This principle analyses if the company provides the performances of areas that include its finance, social responsibility, sustainability and the environment, to the shareholders. The less accountability the higher the risk that managers serve themselves and not the shareholders.
The fourth principal is:
Responsibility: This principle analyses the legal obligations imposed on the directors to make decisions in the best interest of the shareholders. Moreover, it also investigates if the corporate managers carry out the core functions of conducting business. Responsibility is typically ensured through corporate policy and applicable laws.
Thus, the effectiveness of corporate governance mechanisms can be compared through their analysis with regards to their fairness, transparency, accountability and responsibility, with the more of each principle a mechanism has the better it is.
Mechanisms of Spain in Taiwan
The possibility of using some of the mechanisms of Spain in Taiwan is slim. This slim possibility can be attributed to the Spanish corporate governance mechanisms being completely voluntary, and since Taiwan suffers from agency problems and hence utilises concentrated ownership, voluntary corporate governance would simply exacerbate the problem with corporations having less incentive to share the same interest as stockholders. Thus, the possibilities of using some of the mechanisms of Spain in Taiwan is slim due to poor shareholder protection.
References
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Available at: https://www.imf.org/external/pubs/ft/wp/wp9863.pdfThe Local, 2016. Ten Spanish Corruption Scandals. [Online]
Available at: https://www.thelocal.es/20160128/nine-spanish-corruption-scandals-that-will-take-your-breath-awayJ, R., 2010. Key Political Risks to Watch in Taiwan. [Online]
Available at: http://www.reuters.com/article/risks-taiwan/factbox-key-political-risks-to-watch-in-taiwan-idUSRISKTW20100531A, C., 2017. Country and Political risk. [Online]
Available at: https://moodle.telt.unsw.edu.au/pluginfile.php/2805716/mod_resource/content/1/FINS3616.Week6.slds.BH.Chap14.vpresented.v2.pdf
Written by Cabbage-Dealer