1 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
CPA AUSTRALIA
ASIA-PACIFIC
GOVERNANCE SURVEY
BE HEARD.
BE RECOGNISED.
2 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
CPA Australia Ltd (‘CPA Australia’) is one of the world’s largest accounting bodies representing more than 150,000 members of the financial, accounting and
business profession in 121 countries.
ISBN 978-1-921742-56-9
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First published 2014
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3 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
CONTENTS
About the author 4
Executive summary 5
About the survey 6
Questionnaire 6
Data collection 7
Sample 7
Governance index scores 8
Presentation of results 9
Key findings 10
Market results: Australia 13
Market results: China 26
Market results: Hong Kong 38
Market results: Indonesia 51
Market results: Malaysia 65
Market results: New Zealand 78
Market results: Singapore 92
Market results: Vietnam 106
4 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
ABOUT THE AUTHOR
Eva Tsahuridu, PhD, MBA, BBus, is CPA Australia’s
Team Leader of Accounting Policy and the
Professional Standards and Governance Policy
Adviser. She oversees the accounting policy
team and is responsible for research, policy and
resource development in professional and ethical
standards and governance. She participates in
a number of forums on ethics and governance
and contributes to CPA Australia’s publications
INTHEBLACK and INPRACTICE.
Before she joined CPA Australia, Eva was an
academic in Australian and European universities.
Eva published extensively in the areas of business
ethics, whistleblowing and management in
international journals, presented her work in
international conferences and contributed to
academic journals as a member of editorial
boards and as a reviewer.
If you have any comments about this report
please contact:
Dr Eva Tsahuridu
T +613 9606 5159
[email protected]
5 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
EXECUTIVE SUMMARY
The CPA Australia Asia-Pacific Governance
Survey is a ground-breaking, first time look at
perceptions of market and corporate governance
in eight markets: Australia, China, Hong Kong,
Indonesia, Malaysia, New Zealand, Singapore
and Vietnam.
That said, some key differences are evident
in the findings:
The survey provides a snapshot of the views of
shareholders, professionals/business owners and
management executives in the selected markets
and provides a high level comparison of data
between markets.
• P
olitical interference is considered more of
a problem in China and Malaysia and less of
a problem in Hong Kong, Singapore and
Vietnam.
The CPA Australia Asia-Pacific Governance Survey
used a questionnaire, which asked respondents to
record their degree of agreement with a number
of statements, as well as respond to open and
demographic questions.
The perceptions of respondents were analysed
between the three key groups within each market.
They were also analysed between the eight
markets. Eight indices were constructed to enable
effective comparison between markets.
The indices are:
• political interference
• accountability and transparency
• corruption and fraud
• laws and regulations
• shareholder protection
• reporting standards
• auditing standards, and
• company compliance.
The intention of the findings is not to create
a league table of nations. Indeed, it is essential
that the findings for every market be read
in close reference to the local environment,
political landscape, size and scope of the
markets involved and maturity of the respective
stock exchanges concerned.
• A
ccountability and transparency is considered
more positively in Indonesia, Singapore and
Vietnam, and less positively in China, Malaysia
and New Zealand.
• Corruption and fraud are considered a
significantly bigger issue in China, Indonesia,
Malaysia and Vietnam.
• Laws and regulations are considered more
positively in Indonesia and Singapore and
more negatively in Malaysia and New Zealand.
• Shareholder protection is more positive
in Indonesia and more negative in Australia
and New Zealand.
• Reporting standards are more negative in
China and New Zealand and more positive
in Indonesia.
• Auditing standards are more negative in
Australia, China and New Zealand and more
positive in Hong Kong and Indonesia.
• Company compliance is more negative
in China and Malaysia and more positive
in Indonesia.
Overall, more respondents from China, Indonesia
and Vietnam expect market and corporate
governance to improve in the future.
With these findings in mind, we trust this first
Asia-Pacific Governance Survey provides the
basis for further evaluation by policy makers and
regulators alike and lays the groundwork for a
further, longitudinal study into future trends in
market and corporate governance throughout
the region. CPA Australia looks forward to being
a leader in those discussions.
6 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
ABOUT
THE SURVEY
The CPA Australia Asia-Pacific Governance Survey
is a study of market and corporate governance.
The survey was conducted in Australia, China,
Hong Kong, Indonesia, Malaysia, New Zealand,
Singapore and Vietnam. The main objectives
of the research were to identify perceptions
of governance in the selected markets and to
undertake comparative analysis between the
markets. The survey sought responses from
the following three key groups in each market:
QUESTIONNAIRE
The survey instrument was developed by
CPA Australia. Respondents were advised of the
purpose of the research and were informed that
their responses were anonymous. Respondents
were further advised that the survey aimed to find
out perceptions about governance and that
there were no right or wrong answers.
The survey instrument included the following
four sections:
• shareholders
• screening section – to ensure respondents
satisfied set criteria
• professionals/business owners
• market governance section
• management executives
• corporate governance section
The survey was conducted between 10 September
and 18 November 2013 in two phases. Phase one
included data collection from Australia, Hong
Kong and Indonesia, and phase two from China,
Malaysia, New Zealand, Singapore and Vietnam.
Given that this research was undertaken for the
first time, in addition to piloting the survey and
seeking feedback from relevant experts in different
jurisdictions, the two-phase approach was selected
to allow for any issues identified during phase
one to be addressed prior to phase two. The first
phase was conducted between 10 September
and 12 September 2013. Following preliminary
analysis and review of the primary data it was
identified that the two statements that addressed
corruption as a serious problem in government
and business should also be presented in a more
neutral form. As a result, two statements were
added to the market governance section of the
questionnaire: “There is a problem with corruption
in government” and “There is a problem with
corruption in business”. These statements were
added so that corruption can be assessed as
a problem even if it is not considered a serious
problem. The second phase was conducted
between 30 October and 18 November 2013.
• demographic section
The 2013 survey was conducted on behalf
of CPA Australia by Nature Pty Ltd.
For the market and corporate governance
sections, respondents were asked to respond
to a number of statements on a six point scale:
strongly disagree, tend to disagree, neither
agree nor disagree, tend to agree, strongly
agree, and not sure. There were also openended questions in relation to the most urgent
issue that needs to be addressed in market and
corporate governance and questions that asked
respondents to assess governance in the last two
years and their expectations for the future.
The market and corporate governance statements
were developed based on governance theory
and practice and were reviewed by experts.
The Australian, Hong Kong, New Zealand and
Singaporean questionnaires were administered
in English. In China the questionnaire was in
Chinese, in Malaysia in Bahasa Malaysia, the
Indonesian questionnaire was administered in
Bahasa Indonesia, and in Vietnam in Vietnamese.
7 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
DATA COLLECTION
In each market, the survey was conducted
online among randomly selected shareholders,
professionals /business owners and management
executives who were registered with a research
panel. To be able to participate in the survey
respondents were required to satisfy the
following characteristics:
Nature Pty Ltd was responsible for all aspects of
data collection, including the programming of the
online survey, coordinating random selection of
respondents from the research panels, forwarding
the survey to respondents and undertaking
primary analysis of data.
• shareholders: ≥25 years old, who
held investments in shares – outside
of superannuation/retirement savings
• professionals/business owners: ≥25 years
old, who had been working full or part time
for two or more years
• management executives: ≥25 years old, who
had been working full or part time for two
or more years, as owner, chairman, director,
self-employed, CEO, president, CFO, COO,
senior management, middle management or
manager of a company with over 20 employees
SAMPLE
In total, there were 1269 valid online
questionnaires completed, including
160 respondents from Australia, 152 from
China, 158 from Hong Kong, 165 from
Indonesia, 154 from Malaysia, 164 from
New Zealand, 160 from Singapore and
156 from Vietnam. Table 1 shows the
categories for each market’s respondents.
TABLE 1. RESPONDENTS FROM EACH CATEGORY PER MARKET
Malaysia
New
Zealand
Singapore
Vietnam
Total
165
154
164
160
156
1,269
53
56
52
58
51
52
426
50
55
56
52
56
52
52
425
51
50
53
50
50
57
52
418
Australia
China
Hong Kong Indonesia
Total
160
152
158
Shareholders
53
51
Professionals /
Business Owners
52
Management
Executives
55
8 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
GOVERNANCE INDEX SCORES
The statements in the market governance
and corporate governance sections of the
questionnaire were grouped based on the issues
they addressed to create eight governance
index scores. Statements related to general
views on governance that did not offer market
specific perceptions, statements that were
similar in content, and issues covered by single
statements were excluded. For each statement
included in each index, the following process
has been adopted:
1.the ‘positive’ or ‘negative’ direction for each
statement was taken into account. All negative
directional statements were flipped so that
all statements were in the same direction.
Note that this means that the greater the
score the more positive it is, and the lower
the score the more negative it is.
2.the sum of all the scores across the statements
in the index was calculated (for example if there
were four statements, this created a variable
with scores between four and 20).
The resulting distribution of scores was then
normalised to a 0-10 point scale. The average
of the normalised score is taken which gives
the index score (an individual score for each
theme of between 0 and 10). The index scores
created are:
1. Political interference
2. Accountability and transparency
3. Corruption and fraud
4. Laws and regulations
5. Shareholder protection
6. Reporting standards
7. Auditing standards
8. Company compliance
Figure 1 provides the statements of each
index score.
FIGURE 1. INDICES AND STATEMENTS
POLITICAL INTERFERENCE
ACCOUNTABILITY AND TRANSPARENCY
• I think there is no political interference in business
• The government is accountable
• I think there is no political interference in the judiciary
• Listed companies are accountable
• There must be less political interference in the judiciary
• Listed companies are transparent
• The government is transparent
LAWS AND REGULATIONS
• There are appropriate laws and regulations to ensure
good governance
• There is appropriate enforcement of laws and regulations
for good governance
• Most people obey the laws
CORRUPTION AND FRAUD
• Companies face problems because of corruption
• Fraud is a big issue for business
• I think corruption in the government is a serious problem
• I think corruption in business is a serious problem
• I think the government is serious about tackling corruption
AUDITING STANDARDS
• Auditing standards are adequate
• Auditing standards are complied with
• I think external auditors are independent
9 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
PRESENTATION
OF RESULTS
COMPANY COMPLIANCE
• Listed companies comply with the corporate
governance code
• Companies comply with laws and regulations
SHAREHOLDER PROTECTION
• Shareholder rights are adequately protected
• The rights of minority shareholders are
adequately protected
REPORTING STANDARDS
• Financial reports provide users with all the
necessary information
• Financial reports are trustworthy
• Company reporting is adequate
• Company reporting is trusted
• Companies report on compliance with the code
of governance
• Listed entities report on their compliance with the code
of corporate governance adequately
• Information disclosed by companies is adequate
The governance indices allow comparison in
perceptions between markets. Comparison
between indices within each market should be
made with caution. The strength of the scores
within each theme will vary depending on the
strength of the statements within it, so be
mindful when comparing index performance
within a market.
The results of the governance index scores
are represented first, followed by the results
in alphabetical order by market.
All percentage results shown in this report have
been rounded to the nearest whole number and
may not equal 100 per cent.
10 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
KEY FINDINGS
The governance index scores provide an overview
of perceptions for the eight themes across the
eight markets:
1. Political interference
2. Accountability and transparency
3. Corruption and fraud
4. Laws and regulations
5. Shareholder protection
6. Reporting standards
7. Auditing standards
8. Company compliance
These indices allow for comparison between
markets. Figure 2 provides the governance index
scores by market. Overall, respondents from
Indonesia have significantly more positive views
on six indices, followed by respondents from
Singapore who are considerably more positive on
four indices than respondents from other markets.
Respondents from China have significantly more
negative views on six indices, followed by New
Zealand and Malaysia with five.
Responses from Indonesia suggest that while
there is a considerably higher perceived problem
with corruption and fraud in comparison to the
other markets, accountability and transparency,
laws and regulations, shareholder protection,
reporting and auditing standards and company
compliance are significantly more positive than
other markets.
Responses from Singapore are considerably more
positive suggesting respondents there think there
is little political interference, more accountability
and transparency, little corruption and fraud and
better laws and regulations. Malaysia, on the other
hand, scores significantly lower than other markets
in these four indices.
Political interference is perceived to be
significantly more of an issue in China and
Malaysia and much less of an issue in Hong
Kong, Singapore and Vietnam. Accountability
and transparency is considerably lower in
China, Malaysia and New Zealand, indicating
that respondents from these markets are much
less likely to think positively about government
and company accountability and transparency.
Corruption and fraud is perceived to be
significantly more problematic in China, Indonesia,
Malaysia and Vietnam. Laws and regulations
are perceived to be more positive in Indonesia
and Singapore and less so in Malaysia and New
Zealand.
Responses from Australia are average in relation
to the other markets in regard to political
interference, accountability and transparency,
and laws and regulations. Australian scores are
significantly higher in relation to corruption and
fraud, indicating that they are perceived as much
less of an issue than in China, Indonesia, Malaysia
and Vietnam.
FIGURE 2. GOVERNANCE INDEX SCORES BY MARKET
Malaysia
New
Zealand
Singapore
Vietnam
3.8
3.2
3.9
4.4
4.9
5.7
6.8
5.1
5.1
6.3
6.1
3.3
4.2
2.2
2.5
4.7
4.0
2.9
6.7
7.1
7.0
7.6
5.8
6.6
7.4
7.0
Shareholder Protection
4.7
5.5
5.3
7.3
5.5
4.3
5.6
5.8
Reporting Standards
5.6
5.3
6.0
7.3
5.7
5.2
6.0
5.8
Auditing Standards
5.7
5.5
6.6
7.7
6.3
5.9
6.2
6.7
Company Compliance
6.7
5.9
6.7
7.5
6.2
6.4
6.5
6.6
Australia
China
Political Interference
3.7
3.2
4.3
Accountability
5.5
4.9
Corruption and Fraud
4.5
Laws and Regulations
Significantly higher than other markets
Hong Kong Indonesia
Significantly lower than other markets
11 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
While the results presented in Figure 2 reflect the
significant differences between markets, there
are also major differences between respondents
by category: shareholders, professionals/
business owners and management executives.
These should be taken into consideration in
understanding the differences between markets.
Figure 2 also indicates that there are considerable
differences between markets on perceptions of
shareholder protection, reporting and auditing
standards and company compliance. While
responses from Singapore and Vietnam are
neither significantly higher nor lower than other
markets in all four indices, Indonesia is much
higher in all four. This suggests that respondents
from Indonesia are less likely than those from the
other markets to think that there are problems in
relation to shareholder protection, reporting and
auditing standards and company compliance.
Only respondents from Hong Kong are also
considerably more likely to think that there are
no issues in relation to auditing standards.
In Hong Kong, New Zealand, Singapore and
Vietnam there are no significant differences
between respondents, indicating that the views
of shareholders, professionals/business owners
and management executives are fairly consistent.
There is one significant difference in Australia
and China, two in Malaysia and four in Indonesia.
In the case of Australia, it is notable that
management executives are far less positive than
the other cohorts about the country’s laws and
regulations (Figure 3).
The New Zealand scores are notably lower in
shareholder protection and reporting and auditing
standards. China is significantly less positive in
reporting and auditing standards and company
compliance, while Australia is less positive in
shareholder protection and auditing standards.
FIGURE 3. SIGNIFICANT DIFFERENCES IN AUSTRALIA
LAWS AND REGULATIONS
6.7
Shareholders
Professionals / Business Owners
Management Executives
7.1
6.9
6.3
Significantly higher than other markets
Significantly lower than other markets
In China, while there is a high degree of
consistency across all other groups, shareholders
are less positive with regards to shareholder
protection (Figure 4).
FIGURE 4. SIGNIFICANT DIFFERENCES IN CHINA
SHAREHOLDER PROTECTION
5.5
Shareholders
Professionals / Business Owners
Management Executives
4.9
5.8
5.7
Significantly higher than other markets
Significantly lower than other markets
12 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
The key findings from each market are presented in alphabetical order by market.
In Malaysia, shareholders are significantly more positive about reporting standards and company
compliance (Figure 5).
FIGURE 5. SIGNIFICANT DIFFERENCES IN MALAYSIA
REPORTING STANDARDS
5.7
Shareholders
Professionals / Business Owners
Management Executives
6.1
5.4
5.6
COMPANY COMPLIANCE
6.2
Shareholders
Professionals / Business Owners
Management Executives
6.9
5.9
5.9
Significantly higher than other markets
Significantly lower than other markets
differences between the groups of respondents
(Figure 6).
The greatest number of significant differences
between shareholders, professionals/business
owners and management executives are found
in Indonesia. While overall Indonesia rates higher
in accountability and transparency, laws and
regulations, shareholder protection, reporting
standards, auditing standards and company
compliance, there are a number of significant
Shareholders are considerably more positive
regarding accountability and transparency, and
laws and regulations. Comparatively, professionals/
business owners are much less positive regarding
these aspects, as well as political interference.
FIGURE 6. SIGNIFICANT DIFFERENCES IN INDONESIA
POLITICAL INTERFERENCE
3.8
Shareholders
Professionals / Business Owners
Management Executives
4.2
3.2
4.2
Shareholders
Professionals / Business Owners
Management Executives
7.2
6.0
7.1
ACCOUNTABILITY AND TRANSPARENCY
6.8
LAWS AND REGULATIONS
7.6
Shareholders
Professionals / Business Owners
Management Executives
8.1
7.2
7.5
Shareholders
Professionals / Business Owners
Management Executives
8.0
7.1
8.0
AUDITING STANDARDS
Significantly higher than other markets
7.7
Significantly lower than other markets
While Indonesia appears significantly more positive in most themes, there are more notable differences
between the different groups of respondents, indicating more limited agreement within the sample than
is the case in all other markets.
13 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: AUSTRALIA
MARKET GOVERNANCE
In Australia, good governance is widely believed
to enable economic growth and the majority of
respondents think that the country’s laws are
obeyed and trusted. Respondents believe that
appropriate laws, regulations and institutions exist
to ensure good governance. However, 57 per cent
of respondents tend to agree or strongly agree
that there needs to be less political interference
in the judiciary.
Without deeper investigation on this point alone,
it is difficult to extrapolate what this finding refers
to specifically.
Figure 7 provides the statements where
respondents in Australia tend to agree or
strongly agree the most.
FIGURE 7. HIGHER AGREEMENT IN MARKET GOVERNANCE ISSUES
Good governance enables
economic growth
12%
41%
43%
2% 1% 2%
Most people obey the laws
9%
11%
55%
25%
1%
I trust the laws of Australia
7%
18%
46%
24%
1% 3%
There are appropriate
laws and regulations to
ensure good governance
There are appropriate
institutions to enable good
governance
14%
21%
48%
12%
44%
13%
3% 2%
9%
29%
3% 1%
There must be less political
interference in the judiciary
9%
29%
24%
33%
3% 2%
Ordinary people’s lives
are improving
16%
24%
45%
10%
3% 2%
There is appropriate enforcement
of laws and regulations for
good governance
Not sure
16%
28%
46%
6%
3% 1%
Strongly disagree
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
14 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: AUSTRALIA
(CONTINUED)
There are very few significant differences between
the perceptions of the three groups of respondents
in Australia (Table 2). However, professionals/
business owners responded less positively to
the relationship between good governance and
economic growth, and management executives
appear less positive than shareholders and
professionals/business owners in regard to
most people obeying the country’s laws.
TABLE 2. AGREEMENT BY GROUP OF RESPONDENTS
Shareholders
Professional /
Business Owners
Management
Executives
TOTAL
Shareholders
Professional /
Business Owners
Management
Executives
TEND TO DISAGREE & STRONGLY DISAGREE
TOTAL
TEND TO AGREE & STRONGLY AGREE
Good governance enables
economic growth
84%
89%
75%
87%
3%
0%
2%
5%
Most people obey the laws
80%
87%
83%
71%
9%
4%
12%
13%
I trust the laws of Australia
71%
64%
73%
75%
10%
8%
12%
11%
There are appropriate laws
and regulations to ensure
good governance
60%
58%
62%
60%
16%
11%
12%
24%
There are appropriate
institutions to enable good
governance
58%
51%
60%
62%
11%
13%
8%
11%
There must be less political
interference in the judiciary
56%
60%
46%
62%
11%
8%
15%
11%
Ordinary people’s lives
are improving
55%
55%
54%
56%
18%
19%
13%
22%
There is appropriate
enforcement of laws and
regulations for good
governance
52%
45%
54%
56%
18%
15%
17%
20%
Significantly higher than average
Significantly lower than average
15 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: AUSTRALIA
(CONTINUED)
The issues that Australian respondents show less
agreement with are listed in Figure 8. The majority
of respondents (52 per cent) tend to agree or
strongly agree that the government is accountable
but only 19 per cent tend to agree or strongly
agree that the government is transparent. The
question did not distinguish between different
levels of government.
Perceptions in relation to the existence of
corruption and tackling corruption appear to be
mixed. Corruption in business is seen as a serious
problem by the majority of respondents. Of those
surveyed, 47 per cent tend to agree or strongly
agree that the government is serious in tackling
corruption, while 31 per cent of respondents
neither agree nor disagree.
FIGURE 8. LOWER AGREEMENT IN MARKET GOVERNANCE ISSUES
The government is
accountable
21%
21%
35%
17%
20%
23%
29%
22%
3% 4%
I think corruption in business
is a serious problem
2% 4%
I am confident that laws
are enforced fairly
9%
40%
23%
24%
1% 4%
I think the government
is serious about tackling
corruption
I think corruption in the
government is a serious
problem
13%
34%
31%
18%
3% 3%
9%
23%
23%
17%
25%
3%
I think there is no political
interference in the judiciary
7%
Economic development only
benefits the wealthy people
6%
6%
18%
23%
39%
16%
22%
25%
34%
1%
The government is transparent
4%
16%
31%
38%
9%
3%
I think there is no political
interference in business
3%
19%
46%
21%
3%
Not sure
Strongly disagree
9%
2%
Tend to disagree
There are no significant differences in the
perceptions reported in Figure 8 above between
shareholders, professionals/business owners
and management executives.
Figure 9 provides the perceptions of market
governance over the past two years. Just over
half of all respondents (52 per cent) believe that
Neither agree or disagree
Tend to agree
Strongly agree
things remained the same over the past two years,
followed by those who believe that it worsened
(22 per cent). Management executives deem there
has been some improvement but shareholders and
professionals/business owners are less positive.
Ultimately, however, any differences between the
groups are insignificant.
16 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: AUSTRALIA
(CONTINUED)
FIGURE 9. P
ERCEPTION OF HOW MARKET GOVERNANCE HAS CHANGED
OVER THE PAST TWO YEARS
Shareholders
26%
Worsened
15%
53%
Don’t know / not sure
Remained the same
6%
Improved
Professionals / Business Owners
21%
Worsened
21%
48%
Don’t know / not sure
Remained the same
10%
Improved
Management Executives
18%
Worsened
16%
55%
Improved
Remained the same
11%
Don’t know / not sure
Significantly higher than average
Significantly lower than average
Looking forward, views among these groups are more polarised and have some significant differences
(Figure 10). Overall, 44 per cent of respondents believe things will remain the same and 35 per cent that
they will improve. Only 9 per cent believe that things will worsen. However, when this data is segmented
across the three cohorts, management executives are significantly more optimistic about the future and
shareholders are least optimistic.
17 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: AUSTRALIA
(CONTINUED)
FIGURE 10. P
ERCEPTION OF HOW MARKET GOVERNANCE WILL CHANGE
IN THE FUTURE
Shareholders
26%
Improve
17%
43%
Remain the same
Worsen
13%
Don’t know / not sure
Professionals / Business Owners
15%
Don’t know / not sure
27%
2%
Improve
Worsen
56%
Remain the same
Management Executives
9%
Don’t know / not sure
7%
Worsen
51%
Improve
33%
Remain the same
Significantly higher than average
Significantly lower than average
18 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: AUSTRALIA
(CONTINUED)
More management executives agree with the
proposition that market governance will improve
and not stay the same. This may indicate a clearer
understanding of actions to improve market
governance or it may be an indication that changes
in other spheres affect these views.
Shareholders on the other hand, are more likely
to agree with the view that market governance will
worsen in the future, while professionals/business
owners are much less likely to think that it will
worsen and more likely to believe it will remain
the same.
In response to the open question: “What would
you say is the most urgent issue that needs to be
addressed in relation to market governance in
Australia?” a number of varied themes emerged.
A large proportion of respondents (42 per cent)
either did not have a view or didn’t express a
view. The most frequently cited issues, which only
represent 32 per cent of all responses, were:
• corruption of civil servants, councils, state
government or bureaucracy (6 per cent)
• taxes are too high, complicated or unfair tax
system (5 per cent)
• lack of stability in the financial market, poor
financial products, poor regulation and
controls (5 per cent)
• insider trading (4 per cent)
• monopolies and unfair trading, protection
for small traders, and protection for minority
shareholders (4 per cent)
• the rule of law, too many loopholes in
the legislations, and inappropriate law
enforcement (4 per cent)
• lack of transparency (3 per cent)
Overall, Australian respondents appear to find the
rule of law in Australia to be an important aspect
of market governance and believe that there are
appropriate laws, which are adequately enforced,
and appropriate institutions for good governance.
The majority further believes that the lives of most
people are improving and economic development
does not only benefit wealthy people.
RESPONDENTS’ COMMENTS
“CORRUPTION IN LOCAL
COUNCILS AND STATE
GOVERNMENT”
“COMPLIANCE WITH
TIMELY DISCLOSURE AND
STRONGER PENALTIES
FOR NON-DISCLOSURE OR
MISLEADING STATEMENTS”
“THAT EVERYONE PAYS A FAIR
TAX AND NOT JUST LOWER
AND MIDDLE CLASSES”
19 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: AUSTRALIA
(CONTINUED)
CORPORATE GOVERNANCE
Figure 11 provides the Australian responses to
corporate governance statements. The graph
lists the areas in order of most agreement,
representing tend to agree and strongly agree
responses. In Australia, corporate governance
is widely seen to improve when government
accountability and financial transparency
improves. Further, it is generally believed that
there are appropriate institutions to enable
good governance.
Most respondents believe that the vast majority
of companies behave ethically, comply with laws
and regulations and that listed companies are
accountable and comply with the ASX Corporate
Governance Principles and Recommendations.
In relation to the independence of external
auditors, 50 per cent of respondents tend to
agree or strongly agree that external auditors
are independent, 25 per cent neither agree nor
disagree and 20 per cent tend to disagree or
strongly disagree. More respondents agree that
auditing standards are complied with (48 per cent)
than think that they are adequate (41 per cent).
While 60 per cent of respondents tend to agree
or strongly agree that listed companies are
accountable, 44 per cent think that company
reporting is adequate, 41 per cent think that
financial reports provide users with all the
necessary information and 39 per cent think that
financial reports are trustworthy. Opinions appear
relatively polarised regarding the extent to which
financial reports are seen as trustworthy, and
provide users with the necessary information.
20 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: AUSTRALIA
(CONTINUED)
FIGURE 11. CORPORATE GOVERNANCE IN AUSTRALIA
Corporate governance improves when government accountability
and financial transparency improves
22%
48%
23%
4% 3%
7%
The vast majority of companies behave ethically
22%
50%
14%
3% 4%
7% 9%
There are appropriate institutions to enable good governance
23%
51%
9%
22%
46%
14%
1%
11%
Listed companies are accountable
5% 3%
Listed companies comply with the ASX Corporate Governance Principles
and Recommendations
Companies face problems because the boards of directors make bad
decisions
8% 9%
27%
48%
32%
9%
45%
12%
3% 2% 6%
13%
Companies comply with laws and regulations
28%
48%
9%
31%
48%
8%
2% 1%
Overall I am optimistic about the future of corporate governance in Australia
11%
2% 1%
12%
Fraud is a big issue for business
29%
36%
18%
3% 2%
16%
I think external auditors are independent
25%
44%
5% 4%
6%
24%
The responsibilities of company directors are clearly defined
22%
38%
11%
39%
9%
4% 2%
15%
Auditing standards are complied with
31%
5% 2%
Listed entities report on their compliance with the ASX Corporate Governance
Principles and Recommendations adequately
11%
11%
17%
Corporate governance in Australia is effective
28%
43%
3%
4%
34%
40%
2% 1%
6%
23%
Company reporting is adequate
24%
41%
6% 2%
Companies report on compliance with the ASX Corporate Governance
Principles and Recommendations
4%
13% 8%
36%
24%
Auditing standards are adequate
25%
6% 3%
Not sure
Strongly disagree
Tend to disagree
34%
8%
1%
Neither agree or disagree
39%
3%
Tend to agree
Strongly agree
21 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: AUSTRALIA
(CONTINUED)
FIGURE 11. CORPORATE GOVERNANCE IN AUSTRALIA (CONTINUED)
Companies have the necessary committees for good governance
8%
16%
33%
38%
4%
1%
26%
28%
36%
22%
31%
37%
Financial reports provide users with all the necessary information
5%
1% 4%
Companies face problems because of corruption
4%
4% 2%
26%
Financial reports are trustworthy
29%
33%
3% 3%
6%
18%
Companies have effective risk management frameworks
36%
38%
6% 1%
1%
14%
Corporate governance in Australia is improving
40%
34%
4%
6% 1%
23%
Company reporting is trusted
31%
33%
4%
5% 4%
38%
23%
Boards of directors fulfil their responsibilities
31%
4%
4% 2%
22%
Boards of directors are effective in discharging their responsibilities
36%
29%
5% 3%
5%
30%
Information disclosed by companies is adequate
29%
29%
5% 3%
Companies have effective processes to reduce the risk of mismanagement
4%
24%
39%
29%
4%
4%
Compliance with the ASX Corporate Governance Principles and
Recommendations is overseen adequately
9%
9%
Listed companies are transparent
8%
21%
2%
21% 36%36%
30% 30% 3%
3%
2%
19%
37%
26%
6%
5%
24%
Shareholder rights are adequately protected
38%
26%
4% 3%
The rights of minority shareholders are adequately protected
7%
5%
34%
6%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
34%
18%
2%
Tend to agree
Strongly agree
22 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: AUSTRALIA
(CONTINUED)
Overall, there is a relatively high level of
indifference – respondents who neither agree
nor disagree – with many aspects of corporate
governance in Australia, despite the fact that
respondents had the option to respond by stating
they are not sure about a specific aspect.
There are three significant differences between
the three groups of respondents:
• shareholders exhibit significantly less
agreement with the statement – “Companies
have effective processes to reduce the risk
of mismanagement”
• management executives exhibit significantly
more agreement with the statement –
“Listed companies are transparent”
• management executives exhibit significantly
less agreement with the statement –
“The rights of minority shareholders are
adequately protected”
The majority of all respondents (55 per cent)
think that corporate governance remained the
same over the past two years (Figure 12), 14 per
cent believe it improved and 16 per cent that it
worsened. While more shareholders thought that
it worsened and more management executives
thought it improved, the differences between
the groups are not significant.
23 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: AUSTRALIA
(CONTINUED)
FIGURE 12. P
ERCEPTION OF HOW CORPORATE GOVERNANCE
HAS CHANGED OVER THE PAST TWO YEARS
Shareholders
19%
Worsened
58%
11%
Remained the same
Improved
11%
Don’t know / not sure
Professionals / Business Owners
19%
Don’t know / not sure
17%
54%
Worsened
Remained the same
10%
Improved
Management Executives
20%
Improved
53%
15%
Remained the same
Don’t know / not sure
13%
Worsened
Significantly higher than average
Significantly lower than average
Figure 13 below provides the perceptions for the future. Overall, 33 per cent of respondents expect
improvements in corporate governance, 43 per cent anticipate things to remain the same and 9 per
cent expect things to deteriorate.
A significantly higher percentage of management executives, than professionals / business owners
and shareholders, report that they expect corporate governance to improve. Shareholders and
professionals/business owners report higher agreement with worsening corporate governance in the
future, but not significantly.
24 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: AUSTRALIA
(CONTINUED)
FIGURE 13. P
ERCEPTION OF HOW CORPORATE GOVERNANCE
WILL CHANGE IN THE FUTURE
Shareholders
30%
Improve
42%
15%
Remain the same
Don’t know / not sure
13%
Worsen
Professionals / Business Owners
25%
Improve
15%
50%
Don’t know / not sure
Remain the same
10%
Worsen
Management Executives
38%
Remain the same
13%
44%
Don’t know / not sure
Improve
5%
Worsen
Significantly higher than average
Significantly lower than average
25 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: AUSTRALIA
(CONTINUED)
In response to the open question – “What would
you say is the most urgent issue that needs to be
addressed in relation to corporate governance in
Australia” a number of themes emerged. A large
proportion of respondents (54 per cent) answered
with do not know or did not provide a response
at all. The most frequently cited issues, which
represent 27 per cent of all responses, include:
• insufficient legislation, unstable regulatory
framework on corporate governance, and
many loopholes (4 per cent)
• slow action, light penalty on the unethical
practices and violations (4 per cent)
• lack of transparency (4 per cent)
• rights of minority shareholders are not
adequately protected (3 per cent)
• boards of directors and shareholders are not
made accountable (3 per cent)
RESPONDENTS’ COMMENTS
“TRANSPARENCY OF
COMPANY OPERATION
AND ACCOUNTABILITY TO
SMALLER SHAREHOLDERS”
“DIRECTORS NEED TO
CONCENTRATE MORE
ON SHAREHOLDERS
AND NEED TO BE MORE
INDEPENDENT AND
MORE BROADLY BASED”
• fraud is a big issue for business (3 per cent)
• CEOs get paid too much (3 per cent)
• boards of directors are not independent
(3 per cent)
Overall, respondents appear to be reasonably
satisfied with the Australian governance framework
and compliance with it. They are more likely to view
problems faced by companies as a result of bad
board decisions rather than unethical behaviour.
While 19 per cent of respondents tend to agree
or strongly agree with the statement: “The
government is transparent in the market governance
section”, 32 per cent agree that listed companies are
transparent in the corporate governance section.
The protection of the rights of shareholders and
particularly minority shareholders are the issues
that respondents think are least satisfactory.
“DIRECTORS’ ACCOUNTABILITY
AND RIGHTS OF MINORITY
SHAREHOLDERS”
26 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: CHINA
MARKET GOVERNANCE
Figure 14 provides a breakdown of combined
responses on market governance, which are
most agreed with by respondents. Interestingly,
in the top eight areas of most agreement,
respondents show high levels of assent with the
statements about general compliance with the
law, appropriateness of laws and regulations to
enable good governance but also with corruption
being seen as a serious issue in government and
in business.
In China, while good governance is seen to enable economic growth, the survey revealed
that corruption is an important issue, with
high levels of agreement across most related
statements. However, on the positive side, it is
widely perceived that the government is serious
about tackling corruption.
FIGURE 14. HIGHER AGREEMENT IN MARKET GOVERNANCE ISSUES
There is a problem with
corruption in the government
7%
32%
59%
1% 1%
Good governance enables
economic growth
10%
38%
51%
1% 1%
I think corruption in
the government is a
serious problem
9%
23%
61%
2% 3% 2%
There is a problem with
corruption in business
12%
38%
45%
3% 1% 1%
I think corruption in business
is a serious problem
13%
33%
47%
2% 1% 4%
There must be less political
interference in the judiciary
20%
24%
50%
2% 1% 4%
22%
Most people obey the laws
42%
30%
1%1% 5%
I think the government is serious
about tackling corruption
10%
16%
36%
34%
1% 3%
Economic development only
benefits the wealthy people
11%
21%
32%
33%
3%
There are appropriate laws and
regulations to ensure good
governance
Not sure
9%
26%
47%
17%
2%
Strongly disagree
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
27 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: CHINA
(CONTINUED)
There are very few significant differences between
perceptions of the three groups of respondents
in China as shown in Table 3 below. Management
executives are significantly less likely than
shareholders and professionals/business owners
to agree that corruption in government is a
serious problem.
Professionals/business owners are less positive
about the need for less political interference in
the judiciary and more positive that economic
development only benefits wealthy people.
TABLE 3. AGREEMENT BY GROUP OF RESPONDENTS
Shareholders
Professional /
Business Owners
Management
Executives
TOTAL
Shareholders
Professional /
Business Owners
Management
Executives
TEND TO DISAGREE & STRONGLY DISAGREE
TOTAL
TEND TO AGREE & STRONGLY AGREE
There is a problem
with corruption in the
government
91%
94%
90%
90%
1%
0%
0%
2%
Good governance enables
economic growth
88%
86%
86%
92%
1%
2%
0%
0%
I think corruption in
the government is a
serious problem
84%
88%
90%
75%
5%
8%
0%
8%
There is a problem with
corruption in business
83%
82%
88%
78%
3%
4%
0%
4%
I think corruption in
business is a serious
problem
80%
84%
82%
73%
5%
4%
2%
10%
There must be less political
interference in the judiciary
74%
80%
60%
80%
5%
6%
6%
2%
Most people obey the laws
72%
73%
72%
73%
5%
4%
6%
6%
I think the government
is serious about tackling
corruption
70%
73%
60%
76%
13%
10%
16%
12%
Economic development
only benefits the wealthy
people
65%
57%
76%
63%
14%
14%
10%
18%
There are appropriate laws
and regulations to ensure
good governance
64%
63%
66%
63%
11%
10%
12%
10%
Significantly higher than average
Significantly lower than average
28 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: CHINA
(CONTINUED)
The issues Chinese respondents show less
agreement with are listed in Figure 15. The
majority of respondents think that there is political
interference in business and the judiciary. They
are also more likely to agree that the government
is accountable but less likely to believe that it
is transparent. The question did not make a
distinction regarding the level of government.
In the statements presented in Figure 15, a
relatively large number of respondents neither
agree nor disagree with many of the issues
presented, particularly in relation to trusting the
laws, government accountability and ordinary
people’s lives improving. There are no significant
differences in the perceptions reported in Figure
15 below between shareholders, professionals/
business owners and management executives.
FIGURE 15. LOWER AGREEMENT IN MARKET GOVERNANCE ISSUES
There is appropriate enforcement
of laws and regulations for
good governace
6%
27%
43%
21%
1% 2%
There are appropriate institutions
to enable good governance
8%
31%
38%
21%
1% 1%
Ordinary people’s lives
are improving
9%
34%
38%
17%
1% 2%
The government is
accountable
9%
14%
35%
34%
8%
1%
7%
I trust the laws in China
16%
37%
27%
11%
3%
I am confident that laws are
enforced fairly
9%
20%
32%
26%
9%
3%
14%
The government is transparent
25%
32%
17%
11%
2%
I think there is no political
interference in business
25%
31%
18%
20%
5%
18%
5%
1%
I think there is no political
interference in judiciary
20%
31%
24%
1%
Not sure
Strongly disagree
Tend to disagree
The changes in market governance over the
past two years are generally regarded as positive,
with 47 per cent of respondents agreeing that
things have improved (Figure 16). The number
of respondents who agree that things stayed the
same or worsened are similar with 24 per cent
Neither agree or disagree
Tend to agree
Strongly agree
and 22 per cent respectively. Shareholders are
significantly less likely than the other groups
to not know or not be sure about the changes
in market governance over the past two years,
while management executives are considerably
more likely.
29 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: CHINA
(CONTINUED)
FIGURE 16. PERCEPTION OF HOW MARKET GOVERNANCE
HAS CHANGED OVER THE PAST TWO YEARS
Shareholders
17%
Worsened
0%
Don’t know
/ not sure
49%
Improved
24%
Remained the same
Professionals / Business Owners
24%
Remained the same
18%
50%
Worsened
Improved
8%
Don’t know / not sure
Management Executives
24%
Remained the same
20%
43%
Worsened
Improved
14%
Don’t know / not sure
Significantly higher than average
Significantly lower than average
As indicated in Figure 17, 61 per cent of respondents are optimistic that in the future market governance
will improve. Only 8 per cent of those surveyed expect it to worsen, 14 per cent believe it will remain
the same and 17 per cent do not know or are not sure. There are no significant differences between the
groups.
30 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: CHINA
(CONTINUED)
FIGURE 17. P
ERCEPTION OF HOW MARKET GOVERNANCE WILL CHANGE
IN THE FUTURE
Shareholders
16%
Remain the same
63%
10%
Improve
Worsen
12%
Don’t know / not sure
Professionals / Business Owners
8%
Remain the same
8%
60%
Worsen
Improve
24%
Don’t know / not sure
Management Executives
18%
Remain the same
6%
61%
Worsen
Improve
16%
Don’t know / not sure
Significantly higher than average
Significantly lower than average
31 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: CHINA
(CONTINUED)
In response to the open question – ”What would
you say is the most urgent issue that needs to be
addressed in relation to market governance in
China” the responses are more consistent than
in other markets, showing higher agreement on
identified themes. Only 1 per cent of respondents
said they did not know or did not respond.
Otherwise, the top eight themes, representing
94 per cent of all responses, were:
• the rule of law, judicial justice, too many
loopholes in the legislations, and inappropriate
law enforcement (20 per cent)
• corruption (unspecific) (18 per cent)
• corruption of civil servants, councils, state
government and bureaucracy, and government
not listening to the general public (15 per cent)
• monopolies and unfair trading, protection
for small traders, protection for minority
shareholders, ensure fair competition and
free market (14 per cent)
• too much political interference (for example
in business and the judiciary) (11 per cent)
• an inappropriate management system,
better market supervision and governance,
and deepen reform (7 per cent)
• corruption of corporates (4 per cent)
• lack of transparency (4 per cent)
Overall, Chinese respondents appear concerned
about corruption and political interference in
business and the judiciary. However, many also
think that market governance improved over
the last two years and the majority expect it to
improve further in the future.
RESPONDENTS’ COMMENTS
“PLUG THE LEGAL LOOPHOLES
AND HAVE FIRMS STRICTLY
REGULATED”
“STRENGTHEN THE LEGAL
SYSTEM AND BOLSTER
GOVERNANCE”
“THERE SHOULD BE A CLEAR
DEMARCATION OF FUNCTIONS
OF GOVERNMENT AND
BUSINESS; CLEAR SEPARATION
OF JUDICIAL AND POLITICAL
SYSTEMS; GOVERNMENT’S ROLE
SHOULD BE INDEPENDENT OF
THE JUDICIAL SYSTEM”
CORPORATE GOVERNANCE
Figure 18 provides the Chinese responses to
the corporate governance statements in the
questionnaire. It lists the areas in order of most
agreement – representing tend to agree and
strongly agree responses.
In China, corruption and fraud appear to be
important issues, with high levels of agreement
across most related statements. However, it is
also widely believed that most companies behave
ethically and comply with laws and regulations.
Perceptions about the future of corporate
governance in China are generally positive but
there is less agreement with the effectiveness
of corporate governance currently.
In regard to financial reporting 35 per cent of
respondents consider that they provide users with
all necessary information and 31 per cent consider
them to be trustworthy.
There is little disagreement with statements that
relate to compliance with the governance code,
the adequacy of oversight of compliance and
reporting on compliance with it.
In relation to audit, 38 per cent of respondents
agree that auditing standards are complied
with, 36 per cent that auditing standards are
adequate and 48 per cent that external auditors
are independent.
32 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: CHINA
(CONTINUED)
FIGURE 18. CORPORATE GOVERNANCE IN CHINA
7%
Companies face problems because of corruption
18%
41%
32%
1% 1%
7%
Companies face problems because the boards of directors
make bad decisions
26%
50%
14%
3% 1%
6%
Fraud is a big issue for business
34%
36%
22%
1% 1%
10%
The vast majority of companies behave ethically
29%
48%
9%
32%
43%
11%
1% 3%
Corporate governance improves when government accountability
and financial transparency improves
9%
1% 3%
10%
Corporate governance in China is improving
36%
44%
6%
39%
41%
9%
40%
9%
1% 1%
7%
There are appropriate institutions to enable good governance
1% 3%
13%
Companies comply with laws and regulations
34%
1% 3%
14%
Overall I am optimistic about the future of corporate governance in China
34%
34%
15%
2% 1%
16%
I think external auditors are independent
28%
36%
12%
3% 4%
11%
Companies have the necessary committees for good governance
41%
7%
29%
36%
10%
35%
35%
9%
35%
1% 5%
8%
The rights of minority shareholders are adequately protected
16%
1%
16%
The responsibilities of company directors are clearly defined
2% 3%
Listed companies comply with the Code of Corporate Governance
18%
34%
36%
7%
17%
36%
33%
10%
32%
9%
28%
12%
1% 4%
Compliance with the Code of Corporate Governance is overseen adequately
1% 3%
Companies report on compliance with the Code of Corporate Governance
13%
42%
1% 3%
16%
Boards of directors fulfil their responsibilities
39%
2% 3%
22%
Companies have effective processes to reduce the risk of mismanagement
35%
2% 1%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
34%
6%
Tend to agree
Strongly agree
33 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: CHINA
(CONTINUED)
FIGURE 18. CORPORATE GOVERNANCE IN CHINA (CONTINUED)
Listed entities report on their compliance with the Code of Corporate
Governance adequately
13%
41%
30%
31%
41%
9%
1% 6%
Auditing standards are complied with
32%
2% 5%
6%
7%
Company reporting is adequate
18%
37%
31%
7%
38%
31%
7%
10%
1%
20%
Companies have effective risk management frameworks
1% 3%
7%
Shareholder rights are adequately protected
21%
34%
27%
22%
32%
37%
2%
Auditing standards are adequate
1% 8%
9%
29%
Listed companies are transparent
29%
28%
1% 5%
9%
18%
Financial reports provide users with all the necessary information
41%
29%
2% 3%
6%
16%
Boards of directors are effective in discharging their responsibilities
46%
26%
7%
3% 2%
26%
Company reporting is trusted
31%
26%
4% 7%
Information disclosed by companies is adequate
6%
23%
38%
38%
21%
39%
28%
24%
24%
22%
9%
2% 5%
Financial reports are trustworthy
3% 6%
Corporate governance in China is effective
3%
7%
2% 4%
10%
Listed companies are accountable
26%
38%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
21%
5%
1%
Tend to agree
Strongly agree
34 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: CHINA
(CONTINUED)
Overall, there is a relatively high level of
indifference – respondents that neither agree
nor disagree – with many aspects of corporate
governance in China, despite the fact that
respondents had the option to respond by stating
they are not sure about a specific aspect.
The significant differences between the three
groups of respondents are:
• shareholders exhibited significantly
less agreement with the statement –
“The rights of minority shareholders are
adequately protected”
• management executives exhibited significantly
less agreement and professionals/business
owners more agreement with the statement –
“Listed companies comply with the corporate
governance code”
• management executives exhibited
significantly less agreement with the
statement – “Financial reports provide
users with all the necessary information”
• management executives exhibited significantly
less agreement and professionals/business
owners more agreement with the statement –
“Corporate governance in China is effective”
Figure 19 shows respondents’ views on changes
to corporate governance over the past two
years. Most respondents are of the view that
corporate governance either improved (44 per
cent) or remained the same (38 per cent). Only
11 per cent of respondents believe it worsened
and 7 per cent do not know or are not sure how
corporate governance changed. Interestingly,
more shareholders think that corporate
governance improved than management
executives or professionals/business owners, but
these differences between the groups are not
significant. The only considerable difference is
that shareholders are less likely to not know or not
be sure how corporate governance changed.
35 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: CHINA
(CONTINUED)
FIGURE 19. P
ERCEPTION OF HOW CORPORATE GOVERNANCE
HAS CHANGED OVER THE PAST TWO YEARS
Shareholders
39%
Remained the same
0%
Don’t know
/ not sure
51%
Improved
10%
Worsened
Professionals / Business Owners
12%
Don’t know / not sure
10%
38%
Worsened
Remained the same
40%
Improved
Management Executives
37%
Remained the same
41%
10%
Improved
Don’t know / not sure
12%
Worsened
Significantly higher than average
Significantly lower than average
In relation to the perceptions for the future, 57 per cent of all respondents expect improvements
in corporate governance, 22 per cent expect things to remain the same and 7 per cent expect
deterioration (Figure 20). Overall, there is more optimism for the future than the assessment of
the recent past.
A significantly higher percentage of professionals/business owners and lower percentage of
shareholders reported that they do not know or are not sure as to how corporate governance
will change in the future.
36 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: CHINA
(CONTINUED)
FIGURE 20. P
ERCEPTION OF HOW CORPORATE GOVERNANCE
WILL CHANGE IN THE FUTURE
Shareholders
22%
Remain the same
63%
10%
Improve
Worsen
6%
Don’t know / not sure
Professionals / Business Owners
20%
Remain the same
50%
4%
Improve
Worsen
26%
Don’t know / not sure
Management Executives
24%
Remain the same
59%
12%
Improve
Don’t know / not
sure
6%
Worsen
Significantly higher than
average
Significantly lower than average
37 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: CHINA
(CONTINUED)
In response to the open question of “What would
you say is the most urgent issue that needs to be
addressed in relation to corporate governance
in China” a number of themes emerged. The top
eight themes listed below represent 62 per cent
of all responses. Only 1 per cent said they do
not know and 1 per cent said nothing. The most
frequently cited issues include:
RESPONDENTS’ COMMENTS
“MORE STRINGENT REGULATION
ON COMPANIES; PREVENT
CORPORATE FRAUD”
• fraud is a big issue for business and dishonesty
(11 per cent)
• insufficient legislation, unstable regulatory
framework on corporate governance and
many loopholes (9 per cent)
• companies do not have a sound culture,
system, orientation, goals and competitive
policies (9 per cent)
• companies face problems because of
corruption (such as insider trading and breach
of confidence) (8 per cent)
• poor compliance and law enforcement
(7 per cent)
• lack of transparency and reliability in financial
reports (7 per cent)
• lack of transparency (such as in company
management and government operation)
(7 per cent)
• tighter control and good governance
(unspecified) (5 per cent)
Overall, respondents identify corruption as
an issue but they think that the government is
doing what is needed to address it and expect
further improvements in market and corporate
governance in the future.
“BETTER LEGISLATION
AND SUPERVISION”
“EMPHASIS ON SOUND
CORPORATE CULTURE
AND SYSTEMS”
38 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: HONG KONG
MARKET GOVERNANCE
In Hong Kong, most respondents trust the laws
and believe they are obeyed and enforced.
However, while good governance is widely seen
as an enabler of economic growth, most of those
surveyed also believe that economic development
only benefits the wealthy.
In the top eight areas of most agreement as
shown in Figure 21, respondents show high
agreement with the statements about the rule
of law and there does not appear to be major
concern about corruption. Political interference
in the judiciary is seen as something that should
be addressed but people generally think that
there is appropriate infrastructure for good
governance and laws and regulations for good
governance are enforced.
FIGURE 21. HIGHER AGREEMENT IN MARKET GOVERNANCE ISSUES
Good governance enables
economic growth
4%
15%
4%
15%
39%
39%
3%
Most people obey the laws
54%
24%
2% 1%
I trust the laws of Hong Kong
8%
16%
46%
27%
3%
There must be less political
interference in the judiciary
6%
23%
32%
34%
1% 3%
Economic development only
benefits the wealthy people
13%
18%
9%
23%
49%
16%
3% 1%
I think the government
is serious about tackling
corruption
There are appropriate laws
and regulations to ensure
good governance
There is appropriate
enforcement of laws and
regulations for good
governance
Not sure
43%
20%
3% 3%
9%
25%
49%
14%
1% 2%
10%
27%
46%
14%
2% 1%
Strongly disagree
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
39 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: HONG KONG
(CONTINUED)
There are few significant differences between
perceptions of the three groups of respondents
in Hong Kong (Table 4). Management executives
are significantly more likely to agree that good
governance enables economic growth and
professionals/business owners more likely to
disagree that there should be less political
interference in the judiciary.
TABLE 4. AGREEMENT BY GROUP OF RESPONDENTS
Shareholders
Professional /
Business Owners
Management
Executives
TOTAL
Shareholders
Professional /
Business Owners
Management
Executives
TEND TO DISAGREE & STRONGLY DISAGREE
TOTAL
TEND TO AGREE & STRONGLY AGREE
Good governance enables
economic growth
78%
77%
69%
88%
4%
6%
7%
0%
Most people obey the laws
78%
79%
71%
84%
5%
6%
5%
4%
I trust the laws of
Hong Kong
73%
72%
71%
78%
11%
13%
15%
4%
There must be less political
interference in the judiciary
66%
60%
64%
74%
9%
6%
16%
6%
Economic development
only benefits the wealthy
people
65%
64%
65%
66%
14%
17%
11%
14%
I think the government
is serious about tackling
corruption
63%
58%
64%
68%
11%
11%
11%
12%
There are appropriate laws
and regulations to ensure
good governance
63%
60%
62%
68%
11%
15%
11%
6%
There is appropriate
enforcement of laws and
regulations for good
governance
60%
58%
64%
58%
11%
13%
13%
6%
Significantly higher than average
Significantly lower than average
40 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: HONG KONG
(CONTINUED)
The issues Hong Kong respondents show least
agreement with are listed in Figure 22. Many think
that corruption is a major issue in business and
government. They are also more likely to agree
that the government is accountable but less likely
to believe that it is transparent. The question
did not make a distinction regarding the level of
government. There are no significant differences
in the perceptions reported in Figure 22 between
shareholders, professionals/business owners and
management executives.
FIGURE 22. LOWER AGREEMENT IN MARKET GOVERNANCE ISSUES
I think corruption in business
is a serious problem
14%
23%
27%
32%
1% 2%
There are appropriate
institutions to enable good
governance
10%
29%
44%
13%
1% 2%
I am confident that laws
are enforced fairly
12%
28%
41%
16%
1% 2%
I think corruption in the
government is a serious
problem
20%
23%
33%
19%
2% 3%
The government is
accountable
18%
28%
37%
11%
3% 3%
I think there is no political
interference in the judiciary
6%
21%
30%
30%
11%
3%
The government is
transparent
8%
Ordinary people’s lives
are improving
27%
9%
29%
29%
28%
30%
24%
8%
6%
1%
I think there is no political
interference in business
11%
32%
28%
16%
10%
2%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
Market governance over the past two years is considered to have remained static by 40 per cent of all
respondents, while 39 per cent believe it has worsened (Figure 23). Only 15 per cent of respondents
believe that market governance improved, and 6 per cent are not sure or do not know. There are no
significant differences in perceptions between the three respondent groups.
41 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: HONG KONG
(CONTINUED)
FIGURE 23. PERCEPTION OF HOW MARKET GOVERNANCE
HAS CHANGED OVER THE PAST TWO YEARS
Shareholders
11%
Improved
6%
Don’t know / not sure
42%
Remained the same
42%
Worsened
Professionals / Business Owners
33%
Remained the same
20%
40%
Improved
Worsened
7%
Don’t know / not sure
Management Executives
36%
Worsened
46%
12%
Remained the same
Improved
6%
Don’t know / not sure
Significantly higher than average
Significantly lower than average
Figure 24 shows that respondents appear to expect that the future will be similar to the recent past,
with 42 per cent stating that they expect market governance to remain the same. Also, slightly more
people expect things to worsen (27 per cent) than improve (23 per cent). The only significant differences
between the groups are found in professionals/business owners who are less likely than shareholders
and management executives to think that things will stay the same, and more likely to think that they’ll
improve.
42 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: HONG KONG
(CONTINUED)
FIGURE 24. P
ERCEPTION OF HOW MARKET GOVERNANCE WILL CHANGE
IN THE FUTURE
Shareholders
30%
Worsen
17%
47%
Improve
Remain the same
6%
Don’t know / not sure
Professionals / Business Owners
27%
Worsen
9%
29%
Don’t know / not sure
Remain the same
35%
Improve
Management Executives
24%
Worsen
50%
16%
Remain the same
Improve
10%
Don’t know / not sure
Significantly higher than average
Significantly lower than average
43 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: HONG KONG
(CONTINUED)
In response to the open question: “What would
you say is the most urgent issue that needs to
be addressed in relation to market governance
in Hong Kong?” the responses are largely
fragmented. The top eight themes listed below
represent 47 per cent of all responses. 13 per
cent said they do not know and 26 per cent said
nothing. The themes that were mentioned the
most were:
• housing issues (21 per cent)
• wealth disparity and poverty (6 per cent)
• c orruption of civil servants, councils, state
government and bureaucracy (4 per cent)
• t oo much political interference (such as in
business and in the judiciary) (4 per cent)
• w
e need to change our chief executive or
prime minister (4 per cent)
• c ost of living is too high, inflation and high
price of source materials (3 per cent)
• m
onopolies and unfair trading, protection
for small traders, and protection for minority
shareholders (3 per cent)
• immigration issues (3 per cent)
Overall, respondents from Hong Kong trust the
laws and their enforcement and believe that there
are appropriate market governance mechanisms.
They also think that market governance remained
the same or deteriorated in the last two years and
most do not expect improvements in the future.
RESPONDENTS’ COMMENTS
“HOUSING IS TOO EXPENSIVE”
“STANDARD OF LIVING HAS
DECREASED IN RECENT YEARS
AS HOUSING PRICES, RENT AND
ALSO STAPLES IN GENERAL
MAY LEAVE MANY PEOPLE
WITH LITTLE DISPOSABLE
INCOME AFTER TAXES. THE
GOVERNMENT SHOULD WORK
HARDER TO CONTROL HOUSING
AND COMMODITIES PRICES AT
A MORE AFFORDABLE LEVEL”
“HIGH RENTAL AND
HOUSING FOR THE MIDDLE
INCOME FAMILY”
44 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: HONG KONG
(CONTINUED)
CORPORATE GOVERNANCE
Figure 25 provides the Hong Kong responses
to the corporate governance statements of the
questionnaire. The graph lists the areas in order
of most agreement – representing tend to agree
and strongly agree responses.
In Hong Kong, 61% of respondents strongly
agree or tend to agree that fraud is a big issue
for business and 58% that companies face
problems because boards of directors make
bad decisions.
Perceptions are generally positive across many
corporate governance aspects. However, there
is also a high degree of indifference towards
many aspects, with respondents neither agreeing
nor disagreeing. The protection of minority
shareholder rights is perceived to be the area
of most concern.
Views on financial reporting appear positive,
with 48 per cent of respondents considering
they provide users with all necessary information,
48 per cent think they are adequate and 45 per
cent consider them trustworthy. However,
there are numerous respondents who neither
agreed nor disagreed with the effectiveness
of financial reports.
There is little disagreement with statements that
relate to compliance with the governance code,
the adequacy of oversight of compliance and
reporting on compliance with it.
In relation to audit, 61 per cent of respondents
agree that auditing standards are complied
with, while over half (57 per cent) believe that
auditing standards are adequate and almost
two thirds (65 per cent) agree that external
auditors are independent.
45 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: HONG KONG
(CONTINUED)
FIGURE 25. CORPORATE GOVERNANCE IN HONG KONG
Companies comply with laws and regulations
6%
27%
7%
27%
9%
57%
1%
I think external auditors are independent
15%
50%
1%
Corporate governance improves when government accountability and
financial transparency improves
6%
49%
14%
1% 1%
6%
Listed companies comply with the Corporate Governance Code
30%
30%
9%
53%
2%1%
7%
Fraud is a big issue for business
28%
34%
27%
3% 1%
10%
51%
32%
Auditing standards are complied with
1% 1% 5%
Companies face problems because the boards of directors make
bad decisions
6%
43%
33%
15%
1% 1%
13%
The vast majority of companies behave ethically
27%
48%
10%
1% 1%
8%
Auditing standards are adequate
32%
49%
8%
32%
49%
8%
34%
49%
7%
3% 1%
8%
There are appropriate institutions to enable good governance
1% 3%
Companies report on compliance with the Corporate Governance Code
8%
1% 1%
9%
Companies have effective processes to reduce the risk of mismanagement
35%
46%
7%
34%
45%
8%
34%
46%
7%
35%
45%
7%
37%
42%
9%
1% 2%
10%
Company reporting is trusted
3%
9%
Listed companies are accountable
3% 2%
10%
Companies have the necessary committees for good governance
1% 2%
Listed entities report on their compliance with the Corporate Governance
Code adequately
9%
2%1%
9%
Corporate governance in Hong Kong is effective
36%
47%
1% 3%
11%
Companies have effective risk management frameworks
4%
34%
44%
7%
4%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
46 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: HONG KONG
(CONTINUED)
FIGURE 25. CORPORATE GOVERNANCE IN HONG KONG (CONTINUED)
12%
Overall I am optimistic about the future of corporate governance
in Hong Kong
34%
44%
3% 1%
6%
9%
Compliance with the Corporate Governance Code is overseen adequately
38%
44%
3% 1%
Financial reports provide users with all the necessary information
4%
15%
33%
16%
33%
9%
39%
4%
Company reporting is adequate
42%
1% 2%
6%
9%
The responsibilities of company directors are clearly defined
42%
7%
39%
1% 1%
17%
Information disclosed by companies is adequate
33%
41%
3% 3%
4%
10%
Financial reports are trustworthy
41%
7%
38%
4%
15%
Shareholder rights are adequately protected
37%
39%
3% 3%
4%
15%
Boards of directors fulfil their responsibilities
40%
36%
7%
2%
18%
Companies face problems because of corruption
35%
30%
13%
2% 2%
9%
Corporate governance in Hong Kong is improving
44%
37%
3% 2%
Boards of directors are effective in discharging their responsibilities
6%
16%
41%
37%
1% 1%
5%
20%
Listed companies are transparent
35%
38%
1% 2%
4%
28%
The rights of minority shareholders are adequately protected
34%
4% 4%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
26%
3%
Tend to agree
Strongly agree
47 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: HONG KONG
(CONTINUED)
Overall, in Hong Kong there is a relatively low level
of disagreement with the corporate governance
issues addressed, but a high level of indifference –
respondents neither agreed nor disagreed. This is
despite the fact that respondents had the option
to respond by stating they are not sure about a
specific aspect.
The significant differences between the three
groups of respondents are:
• management executives are significantly
more likely to agree and shareholders were
significantly more likely to disagree that
companies comply with laws and regulations
• p
rofessionals/business owners are significantly
less likely and management executives
significantly more likely to agree that listed
companies are accountable
• m
anagement executives are significantly
more likely to agree while shareholders
significantly more likely to disagree that
companies have the necessary committees
for good governance
• m
anagement executives exhibited significantly
more agreement and shareholders less
agreement that compliance with the code of
corporate governance is overseen adequately
Figure 26 shows respondents’ views on corporate
governance over the past two years. Most
respondents are of the view that corporate
governance remained the same (59 per cent).
Only 16 per cent think it has improved, while
19 per cent believe it has worsened and 6 per
cent do not know or are not sure how corporate
governance changed.
Interestingly, fewer management executives
thought that corporate governance improved
than shareholders or professionals/business
owners, but these differences between the groups
are not significant. However, considerably more
management executives thought that corporate
governance remained the same while significantly
more shareholders thought it worsened.
48 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: HONG KONG
(CONTINUED)
FIGURE 26. P
ERCEPTION OF HOW CORPORATE GOVERNANCE
HAS CHANGED OVER THE PAST TWO YEARS
Shareholders
28%
Worsened
17%
51%
Improved
Remained the same
4%
Don’t know / not sure
Professionals / Business Owners
22%
Improve
15%
53%
Worsen
Remained the same
11%
Don’t know / not sure
Management Executives
14%
Worsened
74%
8%
Remained the same
Improved
4%
Don’t know / not sure
Significantly higher than average
Significantly lower than average
In relation to the perceptions for the future, 51 per cent of all respondents expect corporate governance
to remain the same, 26 per cent expect an improvement and 17 per cent expect deterioration (Figure
27). More respondents believe that corporate governance will improve in the future than think that it has
improved in the past two years, but overall the expectation is that things will remain the same.
A significantly higher percentage of professionals/business owners reports that they do not know or are
not sure how corporate governance will change in the future, and a significantly higher percentage of
management executives expect it to remain the same.
49 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: HONG KONG
(CONTINUED)
FIGURE 27. PERCEPTION OF HOW CORPORATE GOVERNANCE
WILL CHANGE IN THE FUTURE
Shareholders
25%
Worsen
26%
47%
Improve
Remain the same
2%
Don’t know / not sure
Professionals / Business Owners
29%
Improve
16%
42%
Worsen
Remain the same
13%
Don’t know / not sure
Management Executives
22%
Improve
64%
Remain the same
10%
Worsen
4%
Don’t know / not sure
Significantly higher than average
Significantly lower than average
50 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: HONG KONG
(CONTINUED)
In response to the open question: “What would
you say is the most urgent issue that needs to be
addressed in relation to corporate governance
in Hong Kong?” 15 per cent of respondents
said they did not know and 44 per cent said
nothing. Of the remainder, the top eight
responses included:
RESPONDENTS’ COMMENTS
”MORE TRANSPARENCY OF THE
LISTED COMPANIES TOWARDS
MINORITY SHAREHOLDERS”
• a lack of transparency (5 per cent)
• insufficient legislation, unstable regulatory
framework on corporate governance, and
many loopholes (4 per cent)
• fraud is a big issue for business (3 per cent)
“SET UP REGULATORY
FRAMEWORK”
• t he rights of minority shareholders are not
adequately protected (3 per cent)
• C
ompanies face problems because of
corruption and dishonesty (for example insider
trading and breach of confidence) (2 per cent)
• lack of transparency and reliability in the
financial report (2 per cent)
• lack of guidelines, supervision on foreign
investments and foreign companies (2 per cent)
• p
revention of monopolistic activities and
unfair competition (2 per cent)
Overall, the majority of respondents feel that
corporate governance has remained the same
and expect it to do so in the future. There is
a high level of indifference with many aspects
of corporate governance, but there is also
strong agreement that companies comply
with the law and the corporate governance
code. Compliance with auditing standards
and auditor independence are also perceived
very positively in relation to the other aspects
of corporate governance.
“UNIVERSALLY RECOGNIZED
CORPORATE GOVERNANCE
FRAMEWORK AND STANDARDS
FOR DISCLOSURES; LAW
ENFORCEMENT”
51 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: INDONESIA
MARKET GOVERNANCE
to enable good governance. Corruption in
business and government are seen as the most
serious problems in Indonesia, with 93 per cent
and 92 per cent of respondents respectively
tending to agree or strongly agree. However in
contrast, most respondents believe that there are
appropriate institutions and laws and regulations
for good governance which are enforced. The
apparent conflict between these two positions
is difficult to explain without further research.
Corruption appears to be a prominent issue for
Indonesia in both government and business.
There also appears to be significant agreement
that there should be less political interference
in the judiciary.
As shown below in Figure 28, despite the
issues identified in relation to corruption, most
respondents agree that good governance
enables economic growth and that there are
appropriate laws, regulations and institutions
FIGURE 28. HIGHER AGREEMENT IN MARKET GOVERNANCE ISSUES
I think corruption in a business
is a serious problem
15%
78%
2% 1% 2% 3%
I think corruption in
the government is a
serious problem
15%
4%
76%
1% 2%1%
There must be less political
interference in the judiciary
24%
4%
67%
2% 1% 2%
Good governance enables
economic growth
5%
25%
65%
1%1% 2%
There are appropriate laws
and regulations to ensure
good governance
4%
15%
48%
1% 1%
There are appropriate
institutions to enable good
governance
15%
2% 2% 2%
There is appropriate
enforcement of laws and
7%
regulations for good
governance 2% 1%
The government is
accountable
Not sure
38%
Strongly disagree
7%
47%
13%
7%
11%
Tend to disagree
36%
32%
8%
45%
27%
Neither agree or disagree
39%
Tend to agree
Strongly agree
52 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: INDONESIA
(CONTINUED)
Unlike findings in some of the other markets,
there are more significant differences between
perceptions of the three groups of respondents in
Indonesia (see Table 5 below), which may explain
some of the contradictory views expressed.
Professionals/business owners are significantly
less likely to agree that good governance enables
economic growth and there is appropriate
enforcement of laws and regulations for good
governance. They are also more likely to disagree
with the view that corruption is a serious problem
for business and government, and that there
must be less political interference in the judiciary.
Shareholders are more likely to agree that the
government is accountable.
TABLE 5. HIGHER AGREEMENT BY GROUP OF RESPONDENTS
Shareholders
Professional /
Business Owners
Management
Executives
TOTAL
Shareholders
Professional /
Business Owners
Management
Executives
TEND TO DISAGREE & STRONGLY DISAGREE
TOTAL
TEND TO AGREE & STRONGLY AGREE
I think corruption in a
business is a serious
problem
93%
91%
93%
94%
2%
0%
7%
0%
I think corruption in
the government is a
serious problem
92%
91%
91%
92%
3%
0%
7%
2%
There must be less political
interference in the judiciary
92%
96%
89%
89%
2%
0%
7%
0%
Good governance enables
economic growth
91%
93%
84%
96%
4%
2%
9%
0%
There are appropriate laws
and regulations to ensure
good governance
85%
91%
86%
79%
5%
2%
9%
4%
There are appropriate
institutions to enable good
governance
83%
82%
86%
81%
5%
4%
7%
4%
There is appropriate
enforcement of laws and
regulations for good
governance
76%
84%
66%
79%
8%
5%
16%
4%
The government is
accountable
67%
79%
61%
60%
18%
9%
20%
25%
Significantly higher than average
Significantly lower than average
53 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: INDONESIA
(CONTINUED)
lives of ordinary people are improving. Political
interference in business and the judiciary is also
seen as an issue, however most respondents trust
the laws of Indonesia and believe the government
is serious in tackling corruption.
The issues respondents from Indonesia showed
less agreement with are listed in Figure 29. In
another example of the apparent conflict in overall
results, two thirds of respondents (66 per cent)
think that economic development only benefits
the wealthy, and 57 per cent also think that the
FIGURE 29. LOWER AGREEMENT IN MARKET GOVERNANCE ISSUES
Economic development only
benefits the wealthy people
7%
13%
13%
36%
30%
2%
Ordinary people’s lives
are improving
19%
17%
28%
29%
4% 2%
I trust the laws of Indonesia
5%
I think the government
is serious about tackling
corruption
8%
Most people obey the laws
7%
I think there is no political
interference in business
7%
The government is
transparent
I am confident that laws are
enforced fairly
I think there is no political
interference in the judiciary
Not sure
Strongly disagree
5%
8%
6%
6%
22%
12%
5%
11%
15%
10%
21%
10%
11%
10%
15%
Tend to disagree
32%
27%
15%
26%
27%
19%
24%
15%
29%
28%
33%
13%
28%
24%
13%
14%
Neither agree or disagree
19%
21%
20%
24%
16%
21%
17%
Tend to agree
Strongly agree
54 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: INDONESIA
(CONTINUED)
on the nine statements of lower agreement, a
number of significant differences are identified
in the Indonesian sample. Table 6 provides
the differences, including the significant ones.
Unlike many other markets surveyed, where
few significant differences are found in the
perceptions of shareholders, professionals/
business owners and management executives
TABLE 6. LOWER AGREEMENT BY GROUP OF RESPONDENTS
Shareholders
Professional /
Business Owners
Management
Executives
TOTAL
Shareholders
Professional /
Business Owners
Management
Executives
TEND TO DISAGREE & STRONGLY DISAGREE
TOTAL
TEND TO AGREE & STRONGLY AGREE
Economic development
only benefits the wealthy
people
65%
64%
71%
60%
20%
23%
18%
19%
Ordinary people's lives are
improving
58%
63%
46%
64%
21%
13%
34%
17%
I trust the laws of Indonesia
55%
68%
43%
55%
28%
16%
43%
26%
I think the government
is serious about tackling
corruption
55%
66%
48%
51%
27%
14%
34%
32%
Most people obey the laws
52%
64%
43%
47%
27%
14%
34%
32%
I think there is no political
interference in business
44%
50%
30%
51%
36%
27%
54%
28%
The government is
transparent
41%
52%
27%
43%
39%
25%
54%
38%
I am confident that laws are
enforced fairly
39%
50%
21%
47%
39%
30%
55%
32%
I think there is no political
interference in the judiciary
38%
43%
27%
43%
42%
29%
61%
38%
Significantly higher than average
Significantly lower than average
Shareholders are generally more positive about
law-related issues, government’s tackling of
corruption and government transparency.
Comparatively, professionals/business owners
are less positive across these factors, as well as
political interference and improvement in the lives
of ordinary people.
As illustrated in Figure 30, market governance
over the past two years is considered to have
been static by 49 per cent of respondents.
Similar views are expressed in relation to
deterioration (25 per cent) or improvement
(24 per cent) in market governance. Again,
shareholders are significantly more likely to
think that market governance improved and
less likely to think that it remained the same
than the other two groups, while professionals/
business owners are considerably less likely
to think it has improved and more likely to
think it has remained the same.
55 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: INDONESIA
(CONTINUED)
FIGURE 30. PERCEPTION OF HOW MARKET GOVERNANCE
HAS CHANGED OVER THE PAST TWO YEARS
Shareholders
21%
Worsened
4%
34%
Don’t know / not sure
Remained the same
41%
Improved
Professionals / Business Owners
25%
Worsened
0%
Don’t know
/ not sure
63%
Remained the same
13%
Improved
Management Executives
28%
Worsened
19%
51%
Improved
Remained the same
2%
Don’t know / not sure
Significantly higher than average
Significantly lower than average
The vast majority of respondents (82 per cent) think that market governance will improve in the future,
however across the three cohorts, shareholders are more confident of this than management executives
(Figure 31). Only 4 per cent of management executives think that governance will worsen, while none of
the shareholders and professionals/business owners surveyed believe things will deteriorate.
56 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: INDONESIA
(CONTINUED)
FIGURE 31. P
ERCEPTION OF HOW MARKET GOVERNANCE WILL CHANGE
IN THE FUTURE
Shareholders
0%
Worsen
7%
91%
Remain the same
Improve
2%
Don’t know / not sure
Professionals / Business Owners
0%
Worsen
11%
Remain the same
82%
Improve
7%
Don’t know / not sure
Management Executives
0%
Don’t know
/ not sure
25%
72%
Remain the same
Improve
4%
Worsen
Significantly higher than average
Significantly lower than average
57 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: INDONESIA
(CONTINUED)
In response to the open question: “What would
you say is the most urgent issue that needs to
be addressed in relation to market governance
in Indonesia” the responses were highly
concentrated. The top eight themes listed
below represent 92 per cent of all responses:
• corruption (unspecific) (31 per cent)
• the rule of law, too many loopholes in the
legislations and inappropriate law enforcement
(15 per cent)
• u
nstable economic state, poor economic
growth, poor value of currency and overseas
debt (13 per cent)
• b
etter development of infrastructure, town
planning and community (10 per cent)
• m
onopolies and unfair trading, protection
for small traders and protection for minority
shareholders (7 per cent)
• c orruption of civil servants, councils, state
government and bureaucracy (5 per cent)
• s ocial and cultural human rights, human
morality, race equality and freedom of speech
(5 per cent)
• c ost of living is too high, inflation and high
price of source materials (5 per cent)
Overall, respondents from Indonesia identify
corruption as a major issue but also think that
the country has the appropriate infrastructure in
place for good governance. They are also very
optimistic that market and corporate governance
will improve in the future.
RESPONDENTS’ COMMENTS
“CUMBERSOME BUREAUCRACY,
CORRUPTION, BRIBES
(GRATUITIES), TRADE CARTELS,
MONOPOLIES, EXTORTION,
JUDGES WHO ARE EASILY
BRIBED AND POLITICIANS
WHO INTERVENE IN BUSINESS”
“IMPROVING THE LAW AND
FIGHTING CORRUPTION”
“THE PROBLEM OF THE
ECONOMIC STATE AND
CORRUPTION IN INDONESIA”
58 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: INDONESIA
(CONTINUED)
CORPORATE GOVERNANCE
Figure 32 provides the responses from
Indonesia to the corporate governance
statements of the questionnaire. The graph
lists the areas in order of most agreement –
representing tend to agree and strongly agree
responses. According to the results, companies
are seen to have effective risk management
frameworks, clearly defined responsibilities
for commissioners and appropriate committees
to enable good governance.
In Indonesia, 94 per cent of respondents agree
or strongly agree that fraud is a big issue for
business, and 83 per cent believe that companies
face problems because of corruption. However,
60 per cent also think that the vast majority of
companies behave ethically, 70 per cent believe
that companies have effective processes to
reduce the risk of mismanagement and 76 per
cent think that companies have effective risk
management frameworks.
Views on financial reporting also appear positive.
The vast majority (84 per cent) of respondents
consider that financial reports provide users
with all necessary information. Further, two
thirds (66 per cent) consider them adequate and
68 per cent consider them to be trustworthy.
Most respondents agree with statements that
relate to compliance with the governance code,
the adequacy of oversight of compliance and
reporting on compliance with it.
In relation to audit, 65 per cent of respondents
agree that auditing standards are complied
with, 69 per cent that auditing standards are
adequate and 79 per cent that external auditors
are independent.
59 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: INDONESIA
(CONTINUED)
FIGURE 32. CORPORATE GOVERNANCE IN INDONESIA
30%
Fraud is a big issue for business
64%
1%1% 2% 2%
Corporate governance improves when government accountability and
financial transparency improves
10%
34%
52%
2% 2%
8%
Financial reports provide users with all the necessary information
49%
35%
4%1% 3%
10%
Companies face problems because of corruption
37%
46%
3%1% 4%
12%
Companies have the necessary committees for good governance
51%
31%
50%
30%
3%1% 2%
11%
There are appropriate institutions to enable good governance
3%1% 5%
12%
Shareholder rights are adequately protected
53%
26%
5% 4%
6%
I think external auditors are independent
9%
34%
45%
5%
6%
Companies have effective risk management frameworks
14%
48%
28%
4%
9% 10%
The responsibilities of boards of commissioners are clearly defined
44%
32%
4% 1%
7%
Listed companies are accountable
11%
48%
28%
1% 5%
Overall I am optimistic about the future of corporate governance in Indonesia
7%
16%
44%
29%
3%
10% 12%
Information disclosed by companies is adequate
50%
20%
44%
26%
5% 2%
Companies have effective processes to reduce the risk of mismanagement
7%
18%
4% 1%
Companies report on compliance with the Code of Good Corporate
Governance
Companies face problems because the boards of commissioners
make bad decisions
9% 6% 15%
7%
18%
41%
29%
42%
27%
4% 2%
Listed companies comply with the corporate governance code
7% 12% 13%
43%
25%
Auditing standards are adequate
8%
45%
24%
18%
5%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
60 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: INDONESIA
(CONTINUED)
FIGURE 32. CORPORATE GOVERNANCE IN INDONESIA (CONTINUED)
9% 9% 12%
Financial reports are trustworthy
44%
24%
2%
Listed entities report on their compliance with the Code of Good
Corporate Governance
10% 9% 13%
Compliance with the Code of Good Corporate Governance
is overseen adequately
7% 10% 13%
39%
28%
43%
24%
3%
7% 10%
Company reporting is adequate
16%
43%
11% 8% 15%
42%
23%
2%
Boards of commissioners fulfil their responsibilities
8% 12%
Auditing standards are complied with
14%
32%
23%
33%
1%
8% 10%
Companies comply with laws and regulations
17%
41%
24%
16%
41%
22%
18%
42%
20%
17%
41%
21%
20%
33%
1%
10% 10%
Listed companies are transparent
1%
7% 10%
The rights of minority shareholders are adequately protected
2%
10% 10%
Company reporting is trusted
1%
Boards of commissioners are effective in discharging their responsibilities
7% 13%
27%
1%
16%
The vast majority of companies behave ethically
16%
40%
20%
5% 2%
Corporate governance in Indonesia is improving
10% 10%
19%
41%
18%
41%
16%
2%
Corporate governance in Indonesia is effective
9%
13%
16%
4%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
61 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: INDONESIA
(CONTINUED)
Overall, in Indonesia there is a relatively low level
of disagreement and indifference (neither agree
/ nor disagree responses) with the corporate
governance issues addressed and a high level of
agreement. However, several issues are identified.
In addition to corruption and fraud, most agree
that companies face problems because the
boards of commissioners make bad decisions.
There are a number of significant differences
between the three groups of respondents,
which included:
• shareholders are significantly more likely to
agree that shareholder rights are adequately
protected, external auditors are independent,
and the responsibilities of company directors
are clearly defined. They are also more likely
to think that auditing standards are adequate,
that information disclosed by companies and
their reporting is adequate and trusted, and
that the majority of companies behave ethically.
• professionals/business owners are significantly
less likely to think that listed companies are
accountable and report on their compliance
with the code of corporate governance
adequately, that auditing standards are
adequate, and that corporate governance
in Indonesia is improving.
Figure 33 shows respondents’ views on corporate
governance over the past two years. Most
respondents are of the view that corporate
governance remained the same (53 per cent).
However, 35 per cent think it has improved,
9 per cent believe it has worsened and 3 per
cent do not know or are not sure if corporate
governance changed.
Shareholders are again more positive in their
assessment of the changes in corporate
governance in the past two years, with 50 per
cent thinking it has improved and 39 per cent of
the view that it has remained the same. These
are significantly different to the perceptions of
professionals/business owners and management
executives who are more likely to think that it
remained the same. Very few from any sub-group
think that corporate governance has worsened.
62 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: INDONESIA
(CONTINUED)
FIGURE 33. P
ERCEPTION OF HOW CORPORATE GOVERNANCE
HAS CHANGED OVER THE PAST TWO YEARS
Shareholders
39%
Remained the same
50%
Improved
7%
Worsened
4%
Don’t know / not sure
Professionals / Business Owners
27%
Improved
61%
Remained the same
9%
Worsened
4%
Don’t know / not sure
Management Executives
28%
Improved
60%
Remained the same
9%
Worsened
2%
Don’t know / not sure
Significantly higher than average
Significantly lower than average
The future of corporate governance in Indonesia appears very positive with 35 per cent indicating that
it has improved in the past two years and most expressing a view that it will further improve in the future
(Figure 34). Overall, 84 per cent of all respondents expect corporate governance to improve, 13 per cent
expect it to remain the same and none of those surveyed expect a deterioration. Again, shareholders
are the most positive, but not significantly so. Management executives are considerably less positive
but remain optimistic when compared to respondents from other markets.
63 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: INDONESIA
(CONTINUED)
FIGURE 34. P
ERCEPTION OF HOW CORPORATE GOVERNANCE
WILL CHANGE IN THE FUTURE
Shareholders
0%
Worsen
7%
91%
Remain the same
Improve
2%
Don’t know / not sure
Professionals / Business Owners
0%
Worsen
9%
Remain the same
86%
Improve
5%
Don’t know / not sure
Management Executives
0%
0%
Worsen
Don’t know
/ not sure
75%
25%
Improve
Remain the same
Significantly higher than average
Significantly lower than average
64 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: INDONESIA
(CONTINUED)
In response to the open question: “What would
you say is the most urgent issue that needs to be
addressed in relation to corporate governance in
Indonesia?” a number of themes emerged. The
top 10 themes listed below represent 72 per cent
of all responses. The most frequently cited issues
include:
• c ompanies face problems because of
corruption and dishonesty (such as insider
trading and breach of confidence) (16 per cent)
• p
oor human resource management and lack
of skilled labour force (8 per cent)
• lack of transparency (8 per cent)
• insufficient legislation, unstable regulatory
framework on corporate governance and
many loopholes (8 per cent)
• lack of transparency and reliability in the
financial report (8 per cent)
• p
oor compliance and law enforcement
(7 per cent)
• bad economic environment (5 per cent)
• d
ifficulty of getting various licenses and
permits granted (4 per cent)
• c ompanies face problems because
of mismanagement (4 per cent)
• c ompanies do not behave ethically and lack
of social responsibilities (4 per cent)
Overall, respondents agree that corporate
governance has improved in the last two years
and the vast majority expect it to improve in
the future. Fraud and corruption are considered
important issues but there is also general
agreement that appropriate institutions for good
governance exist.
RESPONDENTS’ COMMENTS
“THE PREVENTION OF
CORRUPTION AND
INSIDER TRADING”
“MANAGEMENT TRANSPARENCY
AND THE ERADICATION OF
CORRUPTION, COLLUSION
AND NEPOTISM”
“TIGHTEN UP OVERSIGHT OF
COMPANIES. YOU WANT TO
PROSECUTE ANY VIOLATIONS”
65 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: MALAYSIA
MARKET GOVERNANCE
or strongly agree that there is a problem with
corruption in government and 68 per cent think
that there must be less interference in the judiciary.
The survey found a high level of agreement
that there are issues of corruption and political
interference in Malaysia. However, there is also
a widespread view that there are appropriate
institutions, laws and regulations to enable good
governance (Figure 35).
However, despite these views on corruption
in business and government, 49 per cent of
respondents tend to agree or strongly agree
that there are appropriate institutions to enable
good governance, 50 per cent think that there
are appropriate laws and regulations for good
governance and 47 per cent believe most people
obey the laws.
Corruption in business is seen as the most serious
problem in Malaysia, as 83 per cent of respondents
tend to agree or strongly agree that it is a problem
and 82 per cent that it is a serious problem.
Similarly, 76 per cent of respondents tend to agree
FIGURE 35. HIGHER AGREEMENT IN MARKET GOVERNANCE ISSUES
There is a problem with
corruption in business
12%
38%
45%
1% 3% 1%
Good governance enables
economic growth
11%
25%
57%
2% 2% 3%
I think corruption in business
is a serious problem
5% 4%
There is a problem with
corruption in the government
10%
4%
27%
14%
55%
25%
51%
3% 3%
I think corruption in the
government is a serious
problem
5% 4%
14%
15%
60%
1%
There must be less political
interference in the judiciary
6%
19%
23%
45%
2% 4%
Economic development only
benefits the wealthy people
10%
19%
36%
31%
1% 3%
There are appropriate
institutions to enable
good governance
There are appropriate laws
and regulations to ensure
good governance
13%
35%
14%
1% 5%
7%
18%
25%
32%
18%
1%
Most people obey the laws
Not sure
32%
Strongly disagree
5%
17%
Tend to disagree
31%
Neither agree or disagree
33%
Tend to agree
14%
Strongly agree
66 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: MALAYSIA
(CONTINUED)
There are a few significant differences between
perceptions of the three groups of respondents
in Malaysia as shown below in Table 7.
Professionals/business owners are significantly
less likely to think corruption in government is a
serious problem, while management executives
are considerably more likely to agree that it is.
Shareholders are significantly more likely to agree
that there are appropriate laws and regulations
to ensure good governance and that most people
obey the laws.
TABLE 7. HIGHER AGREEMENT BY GROUP OF RESPONDENTS
Shareholders
Professional /
Business Owners
Management
Executives
TOTAL
Shareholders
Professional /
Business Owners
Management
Executives
TEND TO DISAGREE & STRONGLY DISAGREE
TOTAL
TEND TO AGREE & STRONGLY AGREE
There is a problem with
corruption in business
83%
88%
79%
82%
4%
4%
2%
6%
Good governance enables
economic growth
82%
87%
77%
84%
5%
2%
4%
8%
I think corruption in
business is a serious
problem
82%
81%
81%
84%
8%
10%
6%
10%
There is a problem
with corruption in the
government
76%
83%
67%
78%
7%
6%
6%
10%
I think corruption in the
government is a serious
problem
75%
75%
63%
88%
9%
8%
15%
4%
There must be less political
interference in the judiciary
68%
71%
65%
68%
10%
12%
10%
10%
Economic development
only benefits the wealthy
people
68%
71%
63%
68%
13%
12%
19%
8%
There are appropriate
institutions to enable good
governance
49%
48%
44%
56%
18%
19%
15%
18%
There are appropriate laws
and regulations to ensure
good governance
49%
62%
46%
40%
25%
23%
27%
24%
Most people obey the laws
47%
62%
38%
42%
22%
21%
31%
14%
Significantly higher than average
Significantly lower than average
67 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: MALAYSIA
(CONTINUED)
Many respondents (38 per cent) neither agree
nor disagree about whether they trust the laws
of Malaysia, and slightly fewer feel the same way
about their enforcement (30 per cent).
The issues respondents from Malaysia showed
less agreement with are listed in Figure 36.
Only 15 per cent of respondents tend to agree or
strongly agree that the government is transparent,
19 per cent tend to agree or strongly agree that
there is no political interference in business and
23 per cent tend to agree or strongly agree that
there is no political interference in the judiciary.
There are no significant differences in the
perceptions reported in Figure 36 below
between shareholders, professionals/business
owners and management executives.
FIGURE 36. LOWER AGREEMENT IN MARKET GOVERNANCE ISSUES
The government is
accountable
13%
18%
25%
20%
23%
1%
There is appropriate
enforcement of laws and
regulations for good
8%
24%
27%
25%
14%
2%
I think the government
is serious about tackling
corruption
23%
Ordinary people’s lives
are improving
22%
11%
23%
32%
19%
24%
13%
23%
8%
2%
11%
I trust the laws of Malaysia
20%
38%
19%
11%
1%
I am confident that laws are
enforced fairly
16%
29%
30%
18%
7%
15%
8%
1%
I think there is no political
interference in the judiciary
26%
I think there is no political
interference in business
28%
32%
33%
The government is transparent
23%
32%
17%
25%
24%
13%
9%
6%
6%
2%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
Figure 37 provides the Malaysian respondents’ perception of market governance over the past two
years, which is widely perceived to have worsened (47 per cent of all respondents). Only 16 per cent of
those surveyed believe that market governance has improved, and 31 per cent believe that it remained
the same. There are no significant differences between the three groups of respondents.
68 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: MALAYSIA
(CONTINUED)
FIGURE 37. P
ERCEPTION OF HOW MARKET GOVERNANCE
HAS CHANGED OVER THE PAST TWO YEARS
Shareholders
31%
Remained the same
50%
13%
Worsened
Improved
6%
Don’t know / not sure
Professionals / Business Owners
31%
Remained the same
42%
19%
Worsened
Improved
8%
Don’t know / not sure
Management Executives
32%
Remained the same
50%
16%
Worsened
Improved
2%
Don’t know / not sure
Significantly higher than average
Significantly lower than average
While only 16 per cent of respondents think that market governance improved in the past two years, 44
per cent think that it will improve in the future, 25 per cent think that it will worsen and 24 per cent that
it will remain the same (Figure 38). Significantly more shareholders think that market governance will
deteriorate in the future than professional/business owners and management executives.
69 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: MALAYSIA
(CONTINUED)
FIGURE 38. P
ERCEPTION OF HOW MARKET GOVERNANCE WILL CHANGE
IN THE FUTURE
Shareholders
35%
Improve
19%
37%
Remain the same
Worsen
10%
Don’t know / not sure
Professionals / Business Owners
25%
Remain the same
50%
17%
Improve
Worsen
8%
Don’t know / not sure
Management Executives
28%
Remain the same
46%
22%
Improve
Worsen
4%
Don’t know / not sure
Significantly higher than average
Significantly lower than average
70 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: MALAYSIA
(CONTINUED)
In response to the open question: “What would
you say is the most urgent issue that needs to
be addressed in relation to market governance
in Malaysia?” the responses were rather
concentrated. While every respondent expressed
a view, the top eight themes listed below
represent 74 per cent of responses:
RESPONDENTS’ COMMENTS
“POVERTY, CORRUPTION AND
ILLEGAL IMMIGRANTS”
• corruption (unspecific) (27 per cent)
• corruption of civil servants, councils, state
government and bureaucracy, and government
not listening to the general public (10 per cent)
• cost of living is too high, inflation and high
price of source materials (8 per cent)
• s ocial and cultural human rights, human
morality, race equality and freedom of speech
(7 per cent)
• t he rule of law, judicial justice, too many
loopholes in the legislations and inappropriate
law enforcement (6 per cent)
• t oo much political interference (such as in
business and the judiciary) (5 per cent)
“MAIN ISSUE IS TO CONTROL
INFLATIONARY PRESSURES
AND ERADICATE CORRUPTION
IN THE GOVERNMENT AND
JUDICIARY BRANCHES”
“1) A
LOT OF CRIME DAY
AFTER DAY
• lack of transparency (5 per cent)
2) INCREASING PRICE
IN HOUSEHOLD ITEMS
• u
nstable economic state, poor economic
growth, poor value of currency and overseas
debt (5 per cent)
3) L ACK OF HOUSE FOR LOWER
PEOPLE TO OWN/BUY”
Overall, respondents from Malaysia identify
corruption as a major issue in both business and
government. Respondents were also uncertain
about their trust in the laws of Malaysia and
their enforcement and believe there is political
interference in business and the judiciary.
More respondents think that market governance
has worsened than those who feel it has remained
the same, but more expect it to improve in the
future than remain the same or worsen.
71 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: MALAYSIA
(CONTINUED)
CORPORATE GOVERNANCE
Figure 39 provides the responses from Malaysia
to the corporate governance statements of the
questionnaire. The chart lists the areas in order
of most agreement – representing tend to agree
and strongly agree responses. Respondents
identify fraud and corruption as the main issues
businesses face.
In Malaysia, 84 per cent of respondents tend
to agree or strongly agree that fraud is a big
problem for business and 77 per cent think that
companies face problems because of corruption.
Over two thirds (68 per cent) also tend to agree
or strongly agree that companies face problems
because the boards of directors make bad
decisions. However, 59 per cent tend to agree
or strongly agree that there are appropriate
institutions to enable good governance.
While 54 per cent of respondents tend to agree
or strongly agree that financial reports provide
users with all the necessary information, 44 per
cent think company reporting is adequate. Only
36 per cent tend to agree or strongly agree that
financial reports are trustworthy and 39 per cent
that company reporting is trusted.
In relation to compliance with the governance
code, 52 per cent tend to agree or strongly agree
that listed companies comply with the corporate
governance code, 48 per cent that companies
report on compliance with the code adequately,
but 41 per cent agree or strongly agree that
compliance with the code is overseen adequately.
In relation to audit, 58 per cent of respondents
tend to agree or strongly agree that auditing
standards are complied with, 56 per cent that
auditing standards are adequate and 52 per cent
that external auditors are independent.
72 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: MALAYSIA
(CONTINUED)
FIGURE 39. CORPORATE GOVERNANCE IN MALAYSIA
12%
Fraud is a problem for business
44%
40%
1% 1% 3%
14%
Fraud is a big issue for business
35%
45%
1% 4%
18%
Companies face problems because of corruption
42%
35%
1% 2% 3%
Corporate governance improves when government accountability
and financial transparency improves
Companies face problems because the boards of directors make
bad decisions
19%
43%
29%
1% 3% 4%
25%
41%
27%
1% 1% 5%
31%
There are appropriate institutions to enable good governance
45%
14%
1% 3% 6%
8%
Auditing standards are complied with
28%
46%
12%
4% 2%
13%
Auditing standards are adequate
29%
47%
9%
1% 1%
12%
Listed companies are accountable
30%
42%
14%
2% 1%
Financial reports provide users with all the necessary information
10%
31%
44%
10%
2% 3%
Listed companies comply with the Code on Corporate Governance
7%
38%
44%
8%
42%
10%
32%
40%
11%
31%
41%
10%
33%
44%
7%
33%
42%
8%
42%
8%
38%
10%
1% 2%
11%
I think external auditors are independent
34%
2% 1%
13%
The responsibilities of company directors are clearly defined
1% 3%
Companies have effective processes to reduce the risk of mismanagement
16%
1% 2%
Companies have the necessary committees for good governance
10%
3% 3%
Companies comply with laws and regulations
12%
1% 3%
15%
The vast majority of companies behave ethically
27%
3% 5%
Companies have effective risk management frameworks
10%
37%
3% 3%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
73 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: MALAYSIA
(CONTINUED)
FIGURE 39. CORPORATE GOVERNANCE IN MALAYSIA (CONTINUED)
14%
Companies report on compliance with the Code on Corporate Governance
33%
10%
38%
2%3%
Listed entities report on their compliance with the Code on Corporate
Governance adequately
13%
35%
42%
2%2%
6%
16%
Shareholder rights are adequately protected
37%
36%
8%
1% 2%
16%
Company reporting is adequate
34%
37%
2%4%
7%
14%
Overall I am optimistic about the future of corporate governance in Malaysia
36%
32%
10%
1% 6%
16%
Compliance with the Code on Corporate Governance is overseen adequately
40%
35%
1% 2%
6%
17%
Information disclosed by companies is adequate
38%
33%
6%
2%4%
16%
Company reporting is trusted
38%
16%
38%
34%
34%
5%
5%
29%
10%
5% 2%
Corporate governance in Malaysia is improving
19%
34%
16%
39%
31%
7%
35%
32%
6%
4% 3%
Boards of directors are effective in discharging their responsibilities
4% 3%
Corporate governance in Malaysia is effective
6%
19%
6%
1%
6%
Listed companies are transparent
22%
33%
32%
4%
2%
6%
The rights of minority shareholders are adequately protected
19%
36%
30%
40%
31%
6%
3%
19%
Financial reports are trustworthy
3% 3%
16%
Boards of directors fulfil their responsibilities
5%
44%
27%
8%
1% 4%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
74 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: MALAYSIA
(CONTINUED)
Overall, in Malaysia there is a relatively low level of
agreement and high level of indifference with many
of the corporate governance statements, with
the majority of respondents neither agreeing nor
disagreeing.
The significant differences between the three
groups of respondents are:
• s hareholders are more likely to agree that
corporate governance improves when
government accountability and financial
transparency improves
• s hareholders are more likely to agree that
auditing standards are complied with, while
management executives were significantly
less likely to agree
• s hareholders are more likely to agree and
professionals/business owners less likely
to agree that companies comply with laws
and regulations
• s hareholders were more likely to agree that
the vast majority of companies behave ethically
Figure 40 shows respondents’ views on corporate
governance over the past two years. More
respondents are likely to think that corporate
governance remained the same (44 per cent)
than improved (31 per cent). Overall, 21 per cent
of respondents think that corporate governance
worsened and 5 per cent do not know or are
not sure.
There are some differences between the different
groups of respondents, with professionals/business
owners being more likely to believe that corporate
governance improved rather than worsened, but
these differences are not significant.
75 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: MALAYSIA
(CONTINUED)
FIGURE 40. PERCEPTION OF HOW CORPORATE GOVERNANCE
HAS CHANGED OVER THE PAST TWO YEARS
Shareholders
25%
Improved
21%
50%
Worsened
Remained the same
4%
Don’t know / not sure
Professionals / Business Owners
37%
Improved
19%
37%
Worsened
Remained the same
8%
Don’t know / not sure
Management Executives
30%
Improved
50%
22%
Remained the same
Worsened
4%
Don’t know / not sure
Significantly higher than average
Significantly lower than average
The future of corporate governance in Malaysia appears more positive than the assessment of the recent
past (Figure 41). Overall, 44 per cent of all respondents expect corporate governance to improve, 19
per cent expect it to remain the same, and 19 per cent expect deterioration. In addition, 8 per cent of
respondents are not sure or do not know how corporate governance will change in the future.
While shareholders are more likely to believe that corporate governance will remain the same or worsen,
these differences between the groups are not significant. Management executives, however, are significantly
more likely to not know or not be sure about how corporate governance will change in the future.
76 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: MALAYSIA
(CONTINUED)
FIGURE 41. P
ERCEPTION OF HOW CORPORATE GOVERNANCE
WILL CHANGE IN THE FUTURE
Shareholders
37%
Remain the same
23%
37%
Worsen
Improve
4%
Don’t know / not sure
Professionals / Business Owners
29%
Remain the same
48%
17%
Improve
Worsen
6%
Don’t know / not sure
Management Executives
22%
Remain the same
48%
16%
Improve
Worsen
14%
Don’t know / not sure
Significantly higher than average
Significantly lower than average
77 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: MALAYSIA
(CONTINUED)
In response to the open question “What would
you say is the most urgent issue that needs to
be addressed in relation to corporate governance
in Malaysia?” a number of themes emerged.
The top 10 themes (the last four themes all
represent 3 per cent and are included) listed
below represent nearly half (46 per cent) of
responses. Overall, none of those surveyed said
they do not know and just 1 per cent did not
provide a response. The most frequently cited
issues include:
• c ompanies face problems because of
corruption (such as insider trading and breach
of confidence) (12 per cent)
• f raud is a big issue for business and dishonesty
(8 per cent)
• b
ad political environment (for example
corruption, bureaucracy and biased policies)
(5 per cent)
• a
lack of transparency (such as company
management and government operation)
(5 per cent)
• p
oor compliance and law enforcement
(3 per cent)
• t ighter control and good governance
(unspecified) (3 per cent)
• b
oards of directors are not independent
(3 per cent)
• e
mployee rights and welfare need to be
better protected (3 per cent)
• lack of transparency and reliability in the
financial report (3 per cent)
• t oo much government and political influence
on policy and business activity (3 per cent)
Overall, fraud and corruption are considered the
most important issues in Malaysia in government
and business. More respondents are optimistic
about improvements of corporate governance
in the future than those who think that it has
improved in the past two years.
RESPONDENTS’ COMMENTS
“ENSURE INDEPENDENT
DIRECTORS ARE TRULY
INDEPENDENT OF
CONTROLLING SHAREHOLDERS
AND CAN DISCHARGE THEIR
FIDUCIARY DUTIES WITHOUT
FEAR OR FAVOUR”
“DIRECTOR INSIDER TRADING
AND STOCK MANIPULATION”
“HAVING A CLEAN
GOVERNMENT WILL
RESOLVE MANY OF THE
CORPORATE ISSUES”
78 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: NEW ZEALAND
MARKET GOVERNANCE
In New Zealand, as illustrated in Figure 42, there
is a high level of agreement that good governance
enables economic growth, that people obey
and trust the country’s laws and that there
are appropriate institutions to enable good
governance. However, there is some polarisation
in agreement that the government is accountable.
Unlike many other markets surveyed, responses
from New Zealand do not place corruption among
issues with higher agreement.
FIGURE 42. HIGHER AGREEMENT IN MARKET GOVERNANCE ISSUES
Good governance enables
economic growth
5%
51%
35%
4% 2% 4%
Most people obey the laws
12%
64%
18%
2% 4%
I trust the laws of New
Zealand
10%
25%
48%
13%
1% 2%
There are appropriate
institutions to enable good
governance
9%
28%
43%
15%
4% 1%
There must be less political
interference in the judiciary
13%
29%
41%
14%
1% 1%
There are appropriate laws
and regulations to ensure
good governance
15%
The government is
accountable
There is appropriate
enforcement of laws and
regulations for good
governance
I think the government
is serious about tackling
corruption
26%
45%
10%
3% 1%
7%
24%
19%
29%
19%
2%
23%
26%
40%
7%
4% 1%
20%
27%
34%
10%
4% 5%
I am confident that laws
are enforced fairly
26%
26%
36%
7%
1% 4%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
79 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: NEW ZEALAND
(CONTINUED)
There are only two significant differences between
perceptions of the three groups of respondents in
New Zealand (Table 8), indicating little variability
between respondents’ perceptions.
Professionals/business owners are significantly
less likely to trust the laws of New Zealand,
while shareholders are considerably more likely
to trust them.
TABLE 8. HIGHER AGREEMENT BY GROUP OF RESPONDENTS
Shareholders
Professional /
Business Owners
Management
Executives
TOTAL
Shareholders
Professional /
Business Owners
Management
Executives
TEND TO DISAGREE & STRONGLY DISAGREE
TOTAL
TEND TO AGREE & STRONGLY AGREE
Good governance enables
economic growth
85%
86%
79%
92%
5%
7%
5%
4%
Most people obey the laws
82%
81%
84%
80%
7%
7%
7%
6%
I trust the laws of
New Zealand
62%
72%
50%
62%
13%
10%
14%
14%
There are appropriate
institutions to enable good
governance
58%
64%
50%
60%
10%
10%
7%
14%
There must be less political
interference in the judiciary
55%
55%
55%
56%
14%
21%
9%
12%
There are appropriate laws
and regulations to ensure
good governance
54%
59%
46%
58%
16%
14%
21%
14%
The government is
accountable
48%
50%
46%
46%
31%
28%
36%
30%
There is appropriate
enforcement of laws and
regulations for good
governance
47%
53%
38%
50%
23%
19%
29%
22%
I think the government
is serious about tackling
corruption
45%
50%
36%
48%
24%
26%
27%
20%
I am confident that laws are
enforced fairly
43%
48%
36%
46%
30%
28%
39%
22%
Significantly higher than average
Significantly lower than average
80 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: NEW ZEALAND
(CONTINUED)
with 42 per cent tending to agree or strongly
agreeing that corruption is a serious problem
in business, while a third (34 per cent) thought
this was the case for government.
The issues respondents from New Zealand
showed less agreement with are listed in
Figure 43. More than 50 per cent of respondents
tend to disagree or strongly disagree with the
statements “the government is transparent” and
“there is no political interference in business”.
Corruption in business is considered an issue for
more respondents than corruption in government,
A relatively high percentage of respondents
neither agreed nor disagreed with statements
that concern market governance in New Zealand.
FIGURE 43. LOWER AGREEMENT IN MARKET GOVERNANCE ISSUES
I think corruption in business
is a serious problem
7%
24%
23%
27%
15%
4%
There is a problem with
corruption in business
23%
30%
29%
12%
4% 2%
Economic development
only benefits the
wealthy people
9%
35%
16%
28%
10%
2%
I think corruption in
the government is a
serious problem
15%
29%
18%
27%
7%
4%
Ordinary people’s lives
are improving
10%
25%
30%
31%
1%
There is a problem
with corruption in the
government
I think there is no political
interference in the judiciary
5%
2%
12%
5% 5%
27%
29%
36%
21%
30%
18%
6%
5%
1%
The government is transparent
16%
35%
24%
17%
3%
I think there is no political
interference in business
4%
10%
48%
28%
2%
Not sure
Strongly disagree
10%
1%
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
81 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: NEW ZEALAND
(CONTINUED)
There are a number of significant differences in
the perceptions reported in Figure 43 between
shareholders, professionals/business owners and
management executives, as illustrated in Table 9.
Shareholders are significantly less likely to think
corruption in government is a serious problem,
more likely to think that the lives of ordinary
people are improving and less likely to think that
economic development only benefits wealthy
people. Professionals/business owners are
considerably more likely to think that corruption
in government is a problem and less likely to think
that the lives of ordinary people are improving.
TABLE 9. LOWER AGREEMENT BY GROUP OF RESPONDENTS
Shareholders
Professional /
Business Owners
Management
Executives
TOTAL
Shareholders
Professional /
Business Owners
Management
Executives
TEND TO DISAGREE & STRONGLY DISAGREE
TOTAL
TEND TO AGREE & STRONGLY AGREE
I think corruption in
business is a serious
problem
42%
38%
46%
42%
31%
38%
20%
36%
There is a problem with
corruption in business
41%
45%
38%
40%
25%
28%
20%
28%
Economic development
only benefits the wealthy
people
38%
28%
43%
44%
44%
53%
39%
38%
I think corruption in the
government is a serious
problem
34%
21%
46%
36%
43%
55%
29%
46%
Ordinary people's lives are
improving
34%
45%
20%
36%
35%
34%
39%
30%
There is a problem
with corruption in the
government
27%
16%
39%
28%
38%
52%
25%
38%
I think there is no political
interference in the judiciary
23%
24%
21%
24%
41%
29%
52%
44%
The government is
transparent
21%
24%
16%
24%
51%
48%
59%
46%
I think there is no political
interference in business
12%
14%
7%
14%
58%
57%
63%
54%
Significantly higher than average
Significantly lower than average
Figure 44 provides perceptions of changes to
market governance over the past two years, which
is widely perceived to have remained the same
(44 per cent of all respondents). Only 13 per cent of
all respondents think that market governance has
improved, and 20 per cent believe that it worsened.
Almost a quarter of all respondents don’t know or
are not sure how it has changed.
There are no significant differences between the
three groups of respondents.
82 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: NEW ZEALAND
(CONTINUED)
FIGURE 44. PERCEPTION OF HOW MARKET GOVERNANCE
HAS CHANGED OVER THE PAST TWO YEARS
Shareholders
21%
Worsened
17%
47%
Don’t know / not sure
Remained the same
16%
Improved
Professionals / Business Owners
30%
Don’t know / not sure
36%
27%
Remained the same
Worsened
7%
Improved
Management Executives
22%
Don’t know / not sure
50%
16%
Remained the same
Improved
12%
Worsened
Significantly higher than average
Significantly lower than average
While 35 per cent of respondents think that market governance will stay the same, 32 per cent believe
it will improve, 13 per cent think it will worsen, and 20 per cent are not sure or do not know (Figure 45).
Management executives are significantly more likely to think that market governance will improve than
shareholders and professionals/business owners.
83 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: NEW ZEALAND
(CONTINUED)
FIGURE 45. P
ERCEPTION OF HOW MARKET GOVERNANCE WILL CHANGE
IN THE FUTURE
Shareholders
28%
Improve
40%
19%
Remain the same
Don’t know / not sure
14%
Worsen
Professionals / Business Owners
23%
Improve
38%
21%
Remain the same
Don’t know / not sure
18%
Worsen
Management Executives
28%
Remain the same
46%
20%
Don’t know / not sure
Improve
6%
Worsen
Significantly higher than average
Significantly lower than average
84 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: NEW ZEALAND
(CONTINUED)
In response to the open question: “What would
you say is the most urgent issue that needs to
be addressed in relation to market governance
in New Zealand?” the responses are rather
dispersed. The top eight themes listed below
represent 40 per cent of responses. The themes
that were mentioned the most were:
• c orruption of civil servants, councils, state
government and bureaucracy, and government
not listening to the general public (8 per cent)
• t axes are too high, complicated, unfair tax
system and tax evasion (6 per cent)
• t he rule of law, judicial justice, too many
loopholes in the legislations and inappropriate
law enforcement (6 per cent)
RESPONDENTS’ COMMENTS
“ENFORCE EXISTING LAWS
FIRST BUT MAKE MEANINGFUL
PENALTIES FOR WHITE
COLLAR CRIME, THEN
ADDRESS OTHER ISSUES”
“GOVERNMENT NEEDS TO
CONSIDER PUBLIC OPINION”
• lack of accountability (unspecified) (6 per cent)
• corruption of corporates (4 per cent)
• e
xploitation of low wage workers and unfair
minimum wage (4 per cent)
• h
ousing issues (price or rent too high, and lack
of state houses) (3 per cent)
• wealth disparity and poverty (3 per cent)
Overall, respondents from New Zealand are very
positive in relation to the rule of law and the
governance infrastructure. As is the case in other
jurisdictions, they are more likely to think that the
government is accountable but less likely to think
that it is transparent.
More respondents think that market governance
will improve in the future than those who believe
that it has improved in the last two years. There is
a high degree of uncertainty in assessing the past
and predicting the future with more than one in
five respondents being unsure as to how market
governance has changed and how it is expected
to change.
“SHARE OF REVENUE FROM
NZ COMPANIES GOING
OFFSHORE AND FOREIGN
COMPANIES AVOIDING THEIR
TRUE TAX LIABILITY IN NZ”
85 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: NEW ZEALAND
(CONTINUED)
CORPORATE GOVERNANCE
Figure 46 provides the responses from New
Zealand to the corporate governance statements
of the questionnaire. The chart lists the areas in
order of most agreement – representing tend
to agree and strongly agree responses. In New
Zealand, 68 per cent of respondents tend to
agree or strongly agree that fraud is a problem
for business. Interestingly, 61 per cent tend to
agree or strongly agree that companies face
problems because the boards of directors make
bad decisions and 31 per cent tend to agree
or strongly agree that boards of directors are
effective in discharging their responsibilities.
In relation to reporting, 36 per cent of
respondents tend to agree or strongly agree that
company reporting is adequate and financial
reports are trustworthy, while 34 per cent agree or
strongly agree that financial reports provide users
with all the necessary information and 29 per cent
think that the information disclosed by companies
is adequate.
In relation to audit, 48 per cent of respondents
tend to agree or strongly agree that auditing
standards are complied with, 40 per cent believe
that auditing standards are adequate and 61 per
cent that external auditors are independent.
In relation to compliance with the governance
code, 43 per cent agree or strongly agree that
listed companies comply with the corporate
governance code, 42 per cent that companies
report on compliance with the code, but 34 per
cent agree or strongly agree that compliance with
the code is overseen adequately.
The least agreement is found in relation to
shareholder rights, with only 27 per cent agreeing
that they are adequately protected and 15
per cent agreeing that the rights of minority
shareholders are adequately protected.
86 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: NEW ZEALAND
(CONTINUED)
FIGURE 46. CORPORATE GOVERNANCE IN NEW ZEALAND
12%
Fraud is a problem for business
15%
51%
17%
3% 2%
Corporate governance improves when government accountability
and financial transparency improves
7%
23%
10%
The vast majority of companies behave ethically
15%
49%
5%
23%
12%
53%
2% 1%
Companies face problems because the boards of directors make
bad decisions
12%
23%
52%
9%
4% 1%
6% 9%
I think external auditors are independent
21%
50%
11%
3%
7%
Fraud is a big issue for business
19%
17%
42%
12%
2%
7% 14%
There are appropriate institutions to enable good governance
29%
43%
7%
1%
20%
Companies face problems because of corruption
25%
40%
8%
5% 2%
10% 13%
Auditing standards are complied with
26%
43%
5%
2%
17%
Companies comply with laws and regulations
26%
46%
2%
7% 2%
12%
Listed companies are accountable
33%
9%
37%
5% 4%
Overall I am optimistic about the future of corporate governance
in New Zealand
16%
32%
42%
4%
4% 3%
7%
The responsibilities of company directors are clearly defined
19%
26%
37%
8%
2%
Listed companies comply with the code of corporate governance
10% 9%
36%
40%
3%
2%
Companies report on compliance with the code of corporate governance
18%
13%
26%
40%
6%
22%
Auditing standards are adequate
30%
34%
4% 4%
Companies have the necessary committees for good governance
11%
6%
20%
34%
34%
2%
8%
Company reporting is adequate
24%
30%
34%
2%
2%
25%
Financial reports are trustworthy
30%
4% 5%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
34%
2%
Tend to agree
Strongly agree
87 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: NEW ZEALAND
(CONTINUED)
FIGURE 46. CORPORATE GOVERNANCE IN NEW ZEALAND (CONTINUED)
12% 12%
Corporate governance in New Zealand is improving
41%
32%
1%
7%
Boards of directors fulfil their responsibilities
3%
25%
28%
34%
5%
1%
30%
Financial reports provide users with all the necessary information
29%
33%
1%
3% 4%
Compliance with the code of corporate governances is overseen adequately
11%
23%
30%
30%
2%
Companies have effective processes to reduce the risk of mismanagement
10%
3%
27%
27%
32%
2%
Listed entities report on their compliance with the code of corporate
governance adequately
18%
1%
14%
32%
30%
2%
2%
26%
Company reporting is trusted
34%
31%
1%
6% 2%
7%
Corporate governance in New Zealand is effective
20%
38%
28%
2%
Boards of directors are effective in discharging their responsibilities
7%
4%
24%
34%
30%
3%
Companies have effective risk management frameworks
10%
1%
24%
34%
29%
2%
2%
32%
Information disclosed by companies is adequate
29%
28%
5% 4%
1%
31%
Listed companies are transparent
34%
26%
4% 3%
Shareholder rights are adequately protected
9%
1%
31%
29%
26%
4%
7%
The rights of minority shareholders are adequately protected
1%
40%
32%
15%
6%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
88 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: NEW ZEALAND
(CONTINUED)
Overall, in New Zealand there is a relatively
low level of disagreement with many of the
statements that relate to corporate governance
and a high level of respondents who neither
agree nor disagree.
There are a number of significant differences
between the three groups of respondents:
• p
rofessionals/business owners are less
likely to agree that:
−− corporate governance improves when
government accountability and financial
transparency improves
−− companies face problems because
of corruption
−− companies comply with laws
and regulations
−− listed companies are accountable
−− listed companies comply with the
corporate governance code
−− auditing standards are adequate
−− company reporting is adequate
−− financial reports are trustworthy
−− boards of directors fulfil their
responsibilities
−− financial reports provide users with
all the necessary information
−− listed entities report on their
compliance with the code of
corporate governance adequately
−− corporate governance in New Zealand
is effective
−− information disclosed by companies
is adequate
−− listed companies are transparent
• Shareholders are more likely to agree that:
−− auditing standards are complied with
−− listed companies are accountable
−− overall I am optimistic about the future
of corporate governance in New Zealand
−− listed companies comply with the code
of corporate governance
−− financial reports are trustworthy
−− reports provide users with all the
necessary information
−− corporate governance in New Zealand
is effective
• Interestingly, management executives
agree significantly more with the statement:
“Companies face problems because the
boards of directors make bad decisions”
Overall, professionals/business owners seem to
be significantly less positive about many aspects
of corporate governance in New Zealand, while
shareholders appear more positive.
Figure 47 shows respondents’ views on corporate
governance over the past two years. More
respondents are likely to think that corporate
governance remained the same (49 per cent) and
only 16 per cent thought it improved. Overall,
15 per cent of respondents think that corporate
governance worsened and 20 per cent do not
know or are not sure.
There were no significant differences between
the surveyed groups, however professionals/
business owners are less likely to think that
corporate governance improved.
89 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: NEW ZEALAND
(CONTINUED)
FIGURE 47. P
ERCEPTION OF HOW CORPORATE GOVERNANCE
HAS CHANGED OVER THE PAST TWO YEARS
Shareholders
17%
Improved
53%
16%
Remained the same
Don’t know / not sure
14%
Worsened
Professionals / Business Owners
23%
Don’t know / not sure
14%
54%
Worsened
Remained the same
9%
Improved
Management Executives
24%
Improved
38%
20%
Remained the same
Don’t know / not sure
18%
Worsened
Significantly higher than average
Significantly lower than average
The future of corporate governance in New Zealand appears more positive than the recent past (Figure
48). Overall, 28 per cent of all respondents expect corporate governance to improve, 46 per cent expect
it to remain the same, and 10 per cent expect deterioration. In addition, 16 per cent of respondents are
not sure or do not know how corporate governance will change in the future. Professionals/business
owners are significantly less likely to think that corporate governance will improve.
90 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: NEW ZEALAND
(CONTINUED)
FIGURE 48. PERCEPTION OF HOW CORPORATE GOVERNANCE
WILL CHANGE IN THE FUTURE
Shareholders
33%
Improve
12%
45%
Worsen
Remain the same
10%
Don’t know / not sure
Professionals / Business Owners
20%
Don’t know / not sure
55%
18%
Remain the same
Improve
7%
Worsen
Management Executives
34%
Improve
36%
20%
Remain the same
Don’t know / not sure
10%
Worsen
Significantly higher than average
Significantly lower than average
91 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: NEW ZEALAND
(CONTINUED)
In response to the open question “What would
you say is the most urgent issue that needs to
be addressed in relation to corporate governance
in New Zealand?” a number of themes emerged.
The top eight are listed below and represent
39 per cent of all responses. Overall, none of
those surveyed said they do not know or did not
respond. The most frequently cited issues include:
RESPONDENTS’ COMMENTS
• b
oards of directors or shareholders are not
made accountable (6 per cent)
“ENSURING THAT GOOD
CORPORATE GOVERNANCE
DOES NOT RESULT IN
DIRECTORS HIDING BEHIND
GOOD GOVERNANCE
COMPLIANCE WHEN
COMPANY PERFORMANCE
IS INADEQUATE”
• a
lack of transparency (such as company
management and government operation)
(6 per cent)
• a
lack of accountability (unspecified)
(5 per cent)
• insufficient legislation, unstable regulatory
framework on corporate governance and
many loopholes (5 per cent)
• b
oards of directors are not effective
in discharging their responsibilities or
incompetent (5 per cent)
• f raud is a big issue for business and
dishonesty (4 per cent)
• C
ompanies face problems because
of corruption (such as insider trading
or breach of confidence) (4 per cent)
• lack of transparency or reliability in the
financial report (4 per cent)
Overall, more respondents are optimistic
about improvements of corporate governance
in the future than those who think that it has
improved in the past two years. Professionals/
business owners are a lot less positive about
their assessment of corporate governance
in New Zealand at present as indicated by
their responses to the corporate governance
statements, as well as their expectations of
improvements in the future.
“MAKING DIRECTORS
FULLY ACCOUNTABLE”
“E XISTING LAWS NEED TO BE
ENFORCED AND PENALTIES
SUBSTANTIALLY INCREASED”
92 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: SINGAPORE
MARKET GOVERNANCE
In Singapore, results are generally positive
in relation to market governance (Figure 49).
There is a very high level of agreement that
good governance enables economic growth.
It is also widely believed that the laws in
Singapore are appropriate, and that they
are to be trusted, enforced and obeyed.
Most respondents (77 per cent) tend to
agree or strongly agree that the government
is serious about tackling corruption, however
72 per cent think that corruption in business
is a serious problem.
FIGURE 49. HIGHER AGREEMENT IN MARKET GOVERNANCE ISSUES
Good governance enables
economic growth
11%
41%
46%
3%
I trust the laws of
Singapore
18%
49%
29%
18%
52%
26%
1% 1% 3%
There are appropriate laws
and regulations to ensure
good governance
I think the government
is serious about tackling
corruption
1% 1% 3%
4%
16%
41%
36%
2% 1%
6%
Most people obey the laws
17%
1%
There is appropriate
enforcement of laws and
4%
regulations for good
governance 1% 1%
There are appropriate
5%
institutions to enable good
governance
1% 1%
I think corruption in business
is a serious problem
51%
20%
51%
20%
8%
26%
24%
56%
18%
18%
31%
41%
1% 3%
The government is
accountable
8%
21%
39%
30%
1% 1%
I am confident that laws
are enforced fairly
6%
26%
46%
20%
1% 1%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
93 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: SINGAPORE
(CONTINUED)
There are only two significant differences between
perceptions of the three groups of respondents
in Singapore (Table 10), indicating little variability
between perceptions. Professionals/business
owners are significantly more likely to think that
there are appropriate laws and regulations to
ensure good governance, while shareholders are
much less likely to agree that there are appropriate
institutions to enable good governance.
TABLE 10. HIGHER AGREEMENT BY GROUP OF RESPONDENTS
Shareholders
Professional /
Business Owners
Management
Executives
TOTAL
Shareholders
Professional /
Business Owners
Management
Executives
TEND TO DISAGREE & STRONGLY DISAGREE
TOTAL
TEND TO AGREE & STRONGLY AGREE
Good governance enables
economic growth
87%
92%
88%
81%
3%
4%
2%
2%
I trust the laws of Singapore
78%
71%
85%
79%
4%
2%
4%
5%
There are appropriate laws
and regulations to ensure
good governance
78%
69%
88%
75%
4%
4%
0%
7%
I think the government
is serious about tackling
corruption
77%
78%
69%
82%
5%
8%
6%
2%
Most people obey the laws
76%
76%
83%
70%
7%
8%
4%
9%
There is appropriate
enforcement of laws and
regulations for good
governance
75%
71%
75%
79%
4%
6%
2%
5%
There are appropriate
institutions to enable good
governance
74%
63%
81%
77%
6%
8%
6%
4%
I think corruption in
business is a serious
problem
71%
75%
73%
67%
11%
12%
12%
9%
The government is
accountable
69%
65%
71%
72%
9%
12%
12%
5%
I am confident that laws are
enforced fairly
66%
69%
67%
61%
7%
10%
6%
5%
Significantly higher than average
Significantly lower than average
94 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: SINGAPORE
(CONTINUED)
In addition, 39 per cent tend to agree or strongly
agree that there is no political interference in the
judiciary and 26 per cent that there is none in
business. A high percentage of respondents neither
agreed nor disagreed with these statements,
indicating a certain degree of uncertainty.
The issues respondents from Singapore showed
less agreement with are listed in Figure 50. Political
interference is something that respondents identify
as an issue in Singapore, with with 59 per cent
tending to agree or strongly agreeing that there
must be less political interference in the judiciary.
FIGURE 50. LOWER AGREEMENT IN MARKET GOVERNANCE ISSUES
I think corruption in
the government is a
serious problem
6%
16%
17%
19%
41%
1%
There must be less political
interference in the judiciary
8%
29%
36%
23%
3% 3%
Economic development only
benefits the wealthy people
15%
23%
34%
24%
1% 3%
There is a problem with
corruption in business
16%
22%
38%
20%
1% 3%
The government is
transparent
4%
17%
29%
21%
28%
41%
9%
1%
Ordinary people’s lives
are improving
5%
37%
9%
1%
There is a problem with
corruption in the government
8%
21%
4% 4%
24%
30%
26%
13%
3%
I think there is no political
interference in the judiciary
I think there is no political
interference in business
6%
31%
36%
22%
38%
10%
21%
5%
1%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
95 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: SINGAPORE
(CONTINUED)
There are a few significant differences in the
perceptions reported in Table 11 below between
shareholders, professionals/business owners
and management executives. Professionals/
business owners are significantly more likely to
think that there must be less political interference
in the judiciary and that there is a problem with
corruption in business.
TABLE 11. LOWER AGREEMENT BY GROUP OF RESPONDENTS
Shareholders
Professional /
Business Owners
Management
Executives
TOTAL
Shareholders
Professional /
Business Owners
Management
Executives
TEND TO DISAGREE & STRONGLY DISAGREE
TOTAL
TEND TO AGREE & STRONGLY AGREE
I think corruption in the
government is a serious
problem
60%
61%
60%
60%
23%
24%
21%
23%
There must be less political
interference in the judiciary
59%
53%
71%
53%
10%
14%
15%
2%
Economic development
only benefits the wealthy
people
59%
61%
63%
53%
18%
8%
23%
21%
There is a problem with
corruption in business
58%
55%
69%
51%
19%
22%
15%
19%
The government is
transparent
49%
41%
52%
54%
21%
22%
21%
19%
Ordinary people's lives are
improving
46%
43%
50%
46%
26%
29%
21%
26%
There is a problem
with corruption in the
government
39%
33%
44%
39%
29%
25%
29%
32%
I think there is no political
interference in the judiciary
32%
24%
38%
33%
28%
37%
31%
18%
I think there is no political
interference in business
26%
24%
27%
26%
36%
41%
40%
28%
Significantly higher than average
Significantly lower than average
Market governance over the past two years
is widely perceived to have remained the same
(48 per cent of all respondents), as shown in
Figure 51. About a quarter of all respondents
think that market governance has improved,
and 18 per cent believe that it worsened.
In addition, 11 per cent of respondents
did not know or are not sure how it has
changed. There are no significant differences
between the three groups of respondents,
however more shareholders thought market
governance worsened.
96 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: SINGAPORE
(CONTINUED)
FIGURE 51. PERCEPTION OF HOW MARKET GOVERNANCE
HAS CHANGED OVER THE PAST TWO YEARS
Shareholders
25%
Worsened
22%
49%
Improved
Remained the same
4%
Don’t know / not sure
Professionals / Business Owners
27%
Improved
17%
40%
Worsened
Remained the same
15%
Don’t know / not sure
Management Executives
23%
Improved
53%
12%
Remained the same
Worsened
12%
Don’t know / not sure
Significantly higher than average
Significantly lower than average
While the assessment of market governance in Singapore in the recent past is that it mostly remained
the same, respondents are a lot more optimistic about the future with 47 per cent thinking that it will
improve and 34 per cent that it will remain the same (Figure 52). Only 10 per cent of respondents think
that market governance will worsen while 9 per cent are not sure or do not know. Shareholders are
significantly more likely to think that market governance will worsen than professional/business owners
and management executives.
97 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: SINGAPORE
(CONTINUED)
FIGURE 52. P
ERCEPTION OF HOW MARKET GOVERNANCE WILL CHANGE
IN THE FUTURE
Shareholders
27%
Remain the same
18%
45%
Improve
Worsen
10%
Don’t know / not sure
Professionals / Business Owners
37%
Remain the same
48%
8%
Improve
Don’t know / not sure
8%
Worsen
Management Executives
39%
Remain the same
47%
Improve
9%
Don’t know / not sure
5%
Worsen
Significantly higher than average
Significantly lower than average
98 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: SINGAPORE
(CONTINUED)
In response to the open question: “What would
you say is the most urgent issue that needs to be
addressed in relation to market governance in
Singapore?” the responses were rather dispersed.
The top nine themes listed below represent
44 per cent of responses:
• c ost of living is too high, inflation and the
high price of source materials (8 per cent)
• c orruption of civil servants, councils, state
government and bureaucracy, and government
not listening to the general public (8 per cent)
RESPONDENTS’ COMMENTS
“RISING COST OF LIVING
(HOUSING, TRANSPORT)
BUT INCOME LEVEL IS NOT
RISING AS FAST. THERE IS
STILL A LARGE GROUP OF
PEOPLE STRUGGLING TO
MAKE ENDS MEET”
• lack of transparency (6 per cent)
• corruption of corporates (5 per cent)
• h
ousing issues (price or rent too high or
lack of state houses) (4 per cent)
• wealth disparity and poverty (4 per cent)
• e
xploitation of low wage workers and unfair
minimum wages (4 per cent)
• t he rule of law, judicial justice, too
many loopholes in the legislations, and
inappropriate law enforcement (3 per cent)
• g
rowing population and aging population
(3 per cent)
Overall, respondents from Singapore are very
positive in relation to the rule of law and the
government’s efforts to tackle corruption,
which they believe to be a serious problem
in business and government. As is the case
in other jurisdictions, they are more likely to
think that the government is accountable
but less likely to think that it is transparent.
More respondents think that market governance
will improve in the future than think that it
has improved in the last two years. Very few
respondents expect market governance to
deteriorate in the future.
““LAWS AND LEGISLATION
SHOULD APPLY EQUALLY
TO ALL”
“MORE TRANSPARENCY AND
TO HAVE A STANDARD WAY
OF ISSUING ANNUAL REPORTS
IN CLEAR SIMPLE LAYMEN
TERMS. THIS WOULD THEN
ALLOW SHAREHOLDERS (BIG
OR SMALL) TO HAVE A DEEPER
UNDERSTANDING OF WHAT
GOES ON IN THE COMPANY”
99 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: SINGAPORE
(CONTINUED)
CORPORATE GOVERNANCE
Figure 53 provides the responses from Singapore
to the corporate governance statements of the
questionnaire. The chart lists the areas in order of
most agreement – representing tend to agree and
strongly agree responses. Respondents identify
fraud as a problem for business, while the majority
also agree that companies are accountable,
comply with laws and regulations and the vast
majority behave ethically.
In Singapore, 73 per cent of respondents tend to
agree or strongly agree that fraud is a problem for
business while 53 per cent agree that corporate
governance is effective. Interestingly, 61 per cent
of respondents tend to agree or strongly agree
that companies face problems because the
boards of directors make bad decisions, while
45 per cent tend to agree or strongly agree that
boards of directors are effective in discharging
their responsibilities.
In relation to reporting, 55 per cent of
respondents tend to agree or strongly agree
that financial reports provide users with all the
necessary information, 51 per cent that company
reporting is adequate, 45 per cent that company
reporting is trusted and 43 per cent that financial
reports are trustworthy.
Most respondents (56 per cent) tend to agree
or strongly agree that auditing standards are
complied with, 52 per cent feel that auditing
standards are adequate and 53 per cent believe
that external auditors are independent.
In relation to compliance with the governance
code, 62 per cent tend to agree or strongly agree
that listed companies comply with the corporate
governance code, 58 per cent think that companies
report on compliance with the code, and
56 per cent tend to agree or strongly agree that
compliance with the code is overseen adequately.
100 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: SINGAPORE
(CONTINUED)
FIGURE 53. CORPORATE GOVERNANCE IN SINGAPORE
8%
Fraud is a problem for business
18%
39%
34%
1%
32%
Fraud is a big issue for business
33%
3%
Corporate governance improves when government accountability
and financial transparency improves
26%
48%
17%
3% 1% 6%
29%
Listed companies are accountable
54%
9%
1% 2% 5%
11%
Companies comply with laws and regulations
24%
58%
1% 1%
4%
26%
The vast majority of companies behave ethically
7%
55%
3% 3% 6%
Overall I am optimistic about the future of corporate governance in Singapore
8%
26%
53%
9%
1% 3%
30%
Listed companies comply with the Code of Corporate Governance
55%
7%
1% 2% 6%
Companies face problems because the boards of directors make
bad decisions
8%
28%
48%
13%
1% 1%
8%
There are appropriate institutions to enable good governance
28%
9%
52%
1% 3%
13%
Companies face problems because of corruption
26%
43%
16%
1% 1%
31%
Companies report on compliance with the Code of Corporate Governance
53%
5%
3% 2% 6%
9%
The responsibilities of company directors are clearly defined
31% 9%
31% 51%51%
2% 2%
Compliance with the Code of Corporate Governance is overseen adequately
10%
31%
51%
31%
48%
5%
1% 2%
9%
Auditing standards are complied with
5%
5%
8%
2% 2%
36%
Corporate governance in Singapore is improving
49%
3% 2% 6%
13%
Financial reports provide users with all the necessary information
5%
28%
49%
1% 4%
Corporate governance in Singapore is effective
11%
6%
34%
1% 2%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
45%
8%
Tend to agree
Strongly agree
101 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: SINGAPORE
(CONTINUED)
FIGURE 53. CORPORATE GOVERNANCE IN SINGAPORE (CONTINUED)
8%
I think external auditors are independent
34%
44%
9%
3% 2%
Listed entities report on their compliance with the Code of Corporate
Governance adequately
8%
36%
5%
13%
Auditing standards are adequate
48%
3% 1%
33%
44%
8%
1% 1%
Companies have the necessary committees for good governance
10%
34%
46%
4% 1%
5%
12%
Company reporting is adequate
33%
43%
8%
3% 2%
11%
Boards of directors fulfil their responsibilities
35%
42%
4% 3%
6%
9%
Companies have effective risk management frameworks
41%
41%
6%
3% 2%
13%
Shareholder rights are adequately protected
36%
39%
7%
2% 3%
13%
Boards of directors are effective in discharging their responsibilities
37%
39%
4% 2%
6%
9%
Company reporting is trusted
43%
39%
1% 3%
6%
11%
Information disclosed by companies is adequate
38%
39%
2% 5%
6%
19%
Financial reports are trustworthy
31%
39%
3% 4%
4%
13%
Companies have effective processes to reduce the risk of mismanagement
41%
36%
3% 3%
5%
18%
Listed companies are transparent
40%
18%
1% 2%
4%
21%
The rights of minority shareholders are adequately protected
40%
2% 4%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
28%
6%
Tend to agree
Strongly agree
102 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: SINGAPORE
(CONTINUED)
Overall, in Singapore there is a relatively low level
of disagreement with many of the statements
that relate to corporate governance and a high
level of indifference, where respondents neither
agree nor disagree. Aside from this, perceptions
appear generally positive, with little disagreement
with many positive statements about corporate
governance.
There are a number of significant differences
between the three groups of respondents,
which include:
• p
rofessionals/business owners are more likely
to agree with the statements:
−− listed companies are accountable
−− overall I am optimistic about the future
of corporate governance in Singapore
−− the responsibilities of company directors
are clearly defined
−− compliance with the code of corporate
governance is overseen adequately
−− companies have the necessary committees
for good governance
−− boards of directors fulfil their responsibilities
−− companies have effective risk management
frameworks
• S
hareholders are significantly more likely to
agree and management executives much less
likely to agree that companies face problems
because of corruption
• S
hareholders are significantly less likely and
management executives much more likely to
agree that the rights of minority shareholders
are adequately protected
• S
hareholders are significantly less likely to
agree that boards of directors are effective
in discharging their responsibilities and that
financial reports are trustworthy
Overall, professionals/business owners seem to
be significantly more positive about many aspects
of corporate governance in Singapore, while
shareholders appear less positive in relation to
some of its aspects.
Figure 54 shows respondents views on corporate
governance over the past two years. More
respondents are likely to think that corporate
governance remained the same (58 per cent), while
24 per cent believe it improved. Overall, 12 per cent
of respondents think that corporate governance
worsened and 7 per cent do not know or are not
sure. There are no significant differences between
the different groups, however more shareholders
thought that corporate governance worsened.
103 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: SINGAPORE
(CONTINUED)
FIGURE 54. P
ERCEPTION OF HOW CORPORATE GOVERNANCE
HAS CHANGED OVER THE PAST TWO YEARS
Shareholders
18%
Improved
63%
16%
Remained the same
Worsened
4%
Don’t know / not sure
Professionals / Business Owners
25%
Improved
12%
58%
Worsened
Remained the same
6%
Don’t know / not sure
Management Executives
28%
Improved
53%
11%
Remained the same
Don’t know / not sure
9%
Worsened
Significantly higher than average
Significantly lower than average
The future of corporate governance in Singapore appears a lot more positive than
its assessment of the recent past (Figure 55). Overall, 44 per cent of all respondents expect
corporate governance to improve, 40 per cent expect it to remain the same, and 8 per cent expect
a deterioration, are not sure or do not know how corporate governance will change in the future.
Shareholders are significantly more likely to think that corporate governance will remain the same.
104 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: SINGAPORE
(CONTINUED)
FIGURE 55. P
ERCEPTION OF HOW CORPORATE GOVERNANCE
WILL CHANGE IN THE FUTURE
Shareholders
35%
Improve
53%
Remain the same
6%
Worsen
6%
Don’t know / not sure
Professionals / Business Owners
31%
Remain the same
48%
13%
Improve
Worsen
8%
Don’t know / not sure
Management Executives
37%
Remain the same
49%
9%
Improve
Don’t know / not sure
5%
Worsen
Significantly higher than average
Significantly lower than average
105 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: SINGAPORE
(CONTINUED)
In response to the open question of “What would
you say is the most urgent issue that needs to be
addressed in relation to corporate governance in
Singapore?” a number of themes emerged. The
top 10 themes listed below represent 31 per cent
of all responses. Overall, 2 per cent said they do
not know or nothing. The most frequently cited
issues include:
• c ompanies face problems because of
corruption (such as insider trading and
breach of confidence) (6 per cent)
• a
lack of transparency (such as company
management and government operation)
(5 per cent)
• t ighter control and good governance
(unspecified) (5 per cent)
• f raud is a big issue for business and dishonesty
(4 per cent)
• insufficient legislation, unstable regulatory
framework on corporate governance and
many loopholes (2 per cent)
• t he rights of minority shareholders are not
adequately protected (2 per cent)
• p
oor human resource management and lack
of skilful labour force (2 per cent)
• c ompanies do not behave ethically and lack
of social responsibilities (2 per cent)
• b
ad political environment (such as corruption,
bureaucracy and biased policies) (2 per cent)
• a
lack of accountability (unspecified)
(2 per cent)
Overall, more respondents are optimistic about
improvements of corporate governance in the
future than those who think that it has improved
in the past two years. Professionals/business
owners are more positive about their assessment
of corporate governance in Singapore at present
as indicated by their responses to the corporate
governance statements.
RESPONDENTS’ COMMENTS
“TIGHTER GOVERNMENT
CONTROL OVER ERRANT
LISTED COMPANIES THAT
MANIPULATE THE MARKET
AND REPORTS”
“CLOSER ATTENTION BY
GOVERNMENT REGULATORS;
MORE STRINGENT STANDARDS
FOR COMPLIANCE”
“FRAUD WITH
S-CHIP COMPANIES”
106 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: VIETNAM
MARKET GOVERNANCE
Despite the fact that corruption is identified as an
issue in Vietnam, the majority (62 per cent) tend to
agree or strongly agree that the lives of ordinary
people are improving.
In Vietnam, it is widely believed that corruption
in both business and government is a problem.
However, there is also a high level of agreement
that there are appropriate institutions, laws and
regulations to enable good governance. While
the majority of respondents agree that corruption
is a big issue (Figure 56), there is also a strong
view that there are appropriate institutions and
law enforcement for good governance.
FIGURE 56. HIGHER AGREEMENT IN MARKET GOVERNANCE ISSUES
Good governance enables
economic growth
3%
I think corruption in the
government is a serious
problem
3%
I think corruption in business
is a serious problem
4%
There is a problem with
corruption in the government
6%
4%
17%
3%
6%
6%
7%
12%
4%
4% 4% 7%
There are appropriate laws
and regulations to ensure
good governance
67%
13%
60%
23%
17%
12%
4%
14%
47%
34%
34%
15%
31%
37%
15%
32%
35%
19%
29%
36%
1%
There is a problem with
corruption in business
4% 4%
I think there is no political
interference in the judiciary
There are appropriate
institutions to enable good
governance
There is appropriate
enforcement of laws and
regulations for good
governance
8%
12%
2% 2%
12%
21%
30%
33%
28%
35%
3% 1%
5%
13%
17%
3%
Ordinary people’s lives are
improving
8%
13%
15%
36%
26%
3%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
107 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: VIETNAM
(CONTINUED)
There are only two significant differences between
perceptions of the three groups of respondents
in Vietnam (Table 12), indicating little variability
between groups. Professionals/business owners
are significantly more likely to agree that good
governance enables economic growth,
while shareholders are much less likely to agree
that there are appropriate institutions to enable
good governance.
TABLE 12. HIGHER AGREEMENT BY GROUP OF RESPONDENTS
Shareholders
Professional /
Business Owners
Management
Executives
TOTAL
Shareholders
Professional /
Business Owners
Management
Executives
TEND TO DISAGREE & STRONGLY DISAGREE
TOTAL
TEND TO AGREE & STRONGLY AGREE
Good governance enables
economic growth
84%
79%
92%
81%
7%
12%
4%
6%
I think corruption in the
government is a serious
problem
74%
73%
77%
73%
12%
17%
6%
12%
I think corruption in
business is a serious
problem
71%
65%
79%
67%
12%
12%
10%
13%
There is a problem
with corruption in the
government
68%
58%
71%
75%
11%
12%
10%
12%
There are appropriate laws
and regulations to ensure
good governance
67%
60%
73%
69%
17%
21%
10%
19%
There is a problem with
corruption in business
67%
65%
73%
63%
13%
10%
10%
19%
I think there is no political
interference in the judiciary
65%
56%
75%
65%
13%
17%
10%
13%
There are appropriate
institutions to enable good
governance
63%
48%
71%
71%
13%
13%
15%
12%
There is appropriate
enforcement of laws and
regulations for good
governance
62%
54%
69%
63%
18%
25%
10%
19%
Ordinary people's lives are
improving
62%
60%
71%
54%
21%
21%
19%
23%
Significantly higher than average
Significantly lower than average
108 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: VIETNAM
(CONTINUED)
The majority of respondents tend to agree
or strongly agree that most people obey the
laws, which they trust, but fewer people have
confidence that the laws are enforced fairly
The issues respondents from Vietnam showed
less agreement with are listed in Figure 57. There
is a high degree of polarisation with regards to
many aspects, including whether or not economic
development only benefits wealthy people, if the
government is serious about tackling corruption
and whether the government is transparent.
FIGURE 57. LOWER AGREEMENT IN MARKET GOVERNANCE ISSUES
There must be less political
interference in the judiciary
4% 4%
10%
5%
11%
The government is
accountable
23%
36%
23%
22%
24%
34%
3%
Most people obey the laws
I trust the laws of Vietnam
6%
4% 4%
I am confident that laws
are enforced fairly
7%
Economic development only
benefits the wealthy people
6%
The government is transparent
I think the government
is serious about tackling
corruption
I think there is no political
interference in business
Not sure
6%
Strongly disagree
7%
8%
6%
15%
14%
8%
15%
24%
15%
22%
19%
21%
22%
Tend to disagree
30%
26%
26%
18%
28%
23%
20%
7%
27%
25%
31%
22%
24%
Neither agree or disagree
18%
19%
22%
15%
18%
19%
21%
Tend to agree
9%
12%
8%
Strongly agree
109 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: VIETNAM
(CONTINUED)
more likely to trust the laws of Vietnam, while
shareholders are more likely to disagree with
the statements: “There must be less political
interference in the judiciary” and “I am confident
that laws are enforced fairly.”
There are only three significant differences in
the perceptions reported in Figure 57 between
shareholders, professionals/business owners
and management executives (see Table 13).
Professionals/business owners are significantly
TABLE 13. LOWER AGREEMENT BY GROUP OF RESPONDENTS
Shareholders
Professional /
Business Owners
Management
Executives
TOTAL
Shareholders
Professional /
Business Owners
Management
Executives
TEND TO DISAGREE & STRONGLY DISAGREE
TOTAL
TEND TO AGREE & STRONGLY AGREE
There must be less political
interference in the judiciary
58%
52%
58%
65%
14%
23%
10%
10%
The government is
accountable
58%
50%
65%
58%
14%
12%
17%
13%
Most people obey the laws
54%
52%
60%
52%
24%
25%
25%
21%
I trust the laws of Vietnam
53%
46%
65%
48%
19%
21%
15%
19%
I am confident that laws are
enforced fairly
44%
37%
52%
42%
28%
38%
19%
25%
Economic development
only benefits the wealthy
people
34%
44%
27%
31%
41%
37%
46%
40%
The government is
transparent
34%
33%
44%
25%
28%
35%
21%
29%
I think the government
is serious about tackling
corruption
29%
25%
35%
29%
40%
37%
42%
42%
I think there is no political
interference in business
29%
37%
27%
23%
46%
50%
40%
48%
Significantly higher than average
Significantly lower than average
Figure 58 shows the perceptions about market governance over the past two years. More respondents
think it has remained the same (44 per cent), 35 per cent think that it has improved, and 20 per cent
believe that it worsened. Only 1 per cent of respondents didn’t know or were not sure how it has
changed. There are no significant differences between the three groups of respondents.
110 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: VIETNAM
(CONTINUED)
FIGURE 58. P
ERCEPTION OF HOW MARKET GOVERNANCE
HAS CHANGED OVER THE PAST TWO YEARS
Shareholders
33%
Improved
29%
Worsened
37%
Remained the same
2%
Don’t know / not sure
Professionals / Business Owners
37%
Improved
44%
17%
Remained the same
Worsened
2%
Don’t know / not sure
Management Executives
35%
Improved
0%
Don’t know
/ not sure
52%
Remained the same
13%
Worsened
Significantly higher than average
Significantly lower than average
While 35 per cent of all respondents think that market governance improved in Vietnam in the past two
years, 61 per cent think it will improve in the future (Figure 59). There appears to be great optimism for
the future, as only 6 per cent of respondents expect market governance to worsen and 6 per cent do
not know or are not sure. Shareholders are significantly less likely to think that market governance will
improve than professional/business owners and management executives.
111 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: VIETNAM
(CONTINUED)
FIGURE 59. P
ERCEPTION OF HOW MARKET GOVERNANCE WILL CHANGE
IN THE FUTURE
Shareholders
37%
Remain the same
50%
Improve
8%
Don’t know / not sure
6%
Worsen
Professionals / Business Owners
21%
Remain the same
67%
Improve
8%
Worsen
4%
Don’t know / not sure
Management Executives
23%
Remain the same
65%
Improve
6%
Worsen
6%
Don’t know / not sure
Significantly higher than average
Significantly lower than average
112 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: VIETNAM
(CONTINUED)
In response to the open question: “What would
you say is the most urgent issue that needs to be
addressed in relation to market governance in
Vietnam?” the responses are fairly concentrated.
The top eight themes listed below represent
90 per cent of responses:
• corruption (unspecific) (21 per cent)
• lack of consumer protection, the market is full
of low quality fabricated products, and food
safety (16 per cent)
• a
n inappropriate management system, better
market supervision and governance, and
deepen reform (15 per cent)
• c orruption of civil servants, councils, state
government and bureaucracy, and government
not listening to the general public (11 per cent)
• t he rule of law, judicial justice, too many
loopholes in the legislations and inappropriate
law enforcement (8 per cent)
• lack of transparency (7 per cent)
• c ost of living is too high, inflation and the
high price of source materials (6 per cent)
• m
onopolies and unfair trading, protection
for small traders, protection for minority
shareholders and ensure fair competition
and free market (6 per cent)
Overall, respondents from Vietnam are positive
in relation to regulations and laws and their
appropriateness for good governance, but they
also think corruption and political interference
is an issue. However, there is optimism for the
future with most of those surveyed expecting
things to improve.
RESPONDENTS’ COMMENTS
“CORRUPTION IS A BIG PROBLEM
THAT NEEDS TO BE RESOLVED
THOROUGHLY”
“CONTRABAND, PRODUCTS
FROM UNCLEAR ORIGINS”
“ THE THING I AM MOST
CONCERNED WITH IS FOOD
SAFETY, THIS HAS ALSO
RECEIVED A LOT OF PUBLIC
ATTENTION. ALL CONCERNED
NEED TO COLLABORATE TO
RESOLVE THIS ISSUE FOR THE
NATIONAL SAFETY”
113 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: VIETNAM
(CONTINUED)
CORPORATE GOVERNANCE
Figure 60 provides the responses from Vietnam
to the corporate governance statements of the
questionnaire. The statements are presented in
order of most agreement – representing tend to
agree and strongly agree responses. Respondents
identify fraud as a problem for business, while the
majority also agree that companies face problems
because of corruption.
In Vietnam, 78 per cent of respondents tend to
agree or strongly agree that fraud is a problem
for business, while 65 per cent tend to agree or
strongly agree that companies face problems
because of corruption. The majority also agrees
that there are appropriate institutions for good
governance, and companies have the necessary
committees for good governance.
In relation to reporting, 48 per cent of respondents
tend to agree or strongly agree that financial
reports provide users with all the necessary
information, 47 per cent think that company
reporting is adequate, 45 per cent believe that
company reporting is trusted and 63 per cent feel
that financial reports are trustworthy.
The majority of respondents (59 per cent) tend to
agree or strongly agree that auditing standards are
complied with, 59 per cent believe that auditing
standards are adequate and 58 per cent feel that
external auditors are independent.
In relation to compliance with the governance
code, 51 per cent tend to agree or strongly
agree that listed companies comply with the
corporate governance code, 53 per cent believe
that companies report on compliance with the
code, but 50 per cent agree or strongly agree that
compliance with the code is overseen adequately.
114 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: VIETNAM
(CONTINUED)
FIGURE 60. CORPORATE GOVERNANCE IN VIETNAM
10%
Fraud is a problem for business
26%
52%
3% 4% 5%
12%
Fraud is a big issue for business
24%
51%
3% 4% 6%
Corporate governance improves when government accountability
and financial transparency improves
10% 17%
25%
44%
2% 1%
8%
Companies face problems because of corruption
17%
32%
33%
4% 5%
11%
There are appropriate institutions to enable good governance
20%
34%
31%
3% 1%
18%
4% 10% 3%
4% 3%
The responsibilities of company directors are clearly defined
13%
Corporate governance in Vietnam is improving
10% 30%18%
19%
37%
35% 35%
30%
28%
4% 1%
9%
Companies have the necessary committees for good governance
25%
37%
23%
4% 2%
15%
Auditing standards are complied with
21%
33%
26%
21%
31%
28%
4% 1%
12%
Auditing standards are adequate
4% 4%
16%
I think external auditors are independent
17%
35%
23%
5% 3%
12%
Companies have effective processes to reduce the risk of mismanagement
22%
36%
21%
6% 3%
Companies comply with laws and regulations
22%
17%
16%
21%
31%
25%
3% 2%
7%
Listed companies are accountable
31%
23%
2%
16%
Boards of directors are effective in discharging their responsibilities
22%
36%
18%
6% 3%
Companies face problems because the boards of directors make
bad decisions
12%
24%
28%
25%
6% 6%
Companies report on compliance with the Code of Corporate Governance
15%
27%
34%
19%
3% 2%
19%
The vast majority of companies behave ethically
18%
28%
24%
6% 6%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
115 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: VIETNAM
(CONTINUED)
FIGURE 60. CORPORATE GOVERNANCE IN VIETNAM (CONTINUED)
19%
Listed companies comply with the Code of Corporate Governance
24%
30%
21%
28%
29%
21%
4% 2%
15%
Compliance with the Code of Corporate Governance is overseen adequately
5% 3%
19%
22%
26%
24%
16%
24%
27%
22%
22%
23%
26%
22%
18%
24%
29%
20%
23%
31%
17%
Boards of directors fulfil their responsibilities
6% 3%
Overall I am optimistic about the future of corporate governance in Vietnam
8%
3%
Financial reports provide users with all the necessary information
4% 2%
Listed entities report on their compliance with the Code of Corporate
Governance adequately
7%
Listed companies are transparent
8%
3%
17%
3%
19%
21%
31%
16%
20%
24%
26%
20%
19%
24%
9%
Company reporting is adequate
3%
Shareholder rights are adequately protected
8%
2%
Companies have effective risk management frameworks
7%
29%
16%
5%
10%
Company reporting is trusted
22%
21%
28%
17%
4%
Corporate governance in Vietnam is effective
8%
28%
23%
27%
11%
3%
12% 8%
Financial reports are trustworthy
The rights of minority shareholders are adequately protected
12%
28%
17%
23%
25%
20%
30%
24%
17%
12%
17%
5%
Information disclosed by companies is adequate
11%
21%
12%
6%
Not sure
Strongly disagree
Tend to disagree
Neither agree or disagree
Tend to agree
Strongly agree
116 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: VIETNAM
(CONTINUED)
Overall, in Vietnam there is a relatively low level
of disagreement with many of the statements that
relate to corporate governance. The significant
differences between the three groups of
respondents are listed below.
• P
rofessionals/business owners are more likely
to agree that:
−− companies have effective processes
to reduce the risk of mismanagement
−− companies face problems because
of corruption
−− auditing standards are complied with
−− auditing standards are adequate
−− the responsibilities of company directors
are clearly defined
• Shareholders are significantly less likely to agree
that the responsibilities of company directors
are clearly defined and that information
disclosed by companies is adequate
• M
anagement executives are significantly
less likely to agree that fraud is a big issue
for business and companies face problems
because of corruption, but significantly more
likely to be optimistic about the future of
corporate governance in Vietnam, to agree
that financial reports are trustworthy and
information disclosed by companies
is adequate
Figure 61 shows respondents’ views on corporate
governance over the past two years. More
respondents are likely to think that corporate
governance improved (47 per cent) than remained
the same (41 per cent). Overall, 12 per cent of
respondents think that corporate governance
worsened and none of those surveyed replied
that they don’t know or are not sure.
The only significant difference between the
different groups is that more shareholders
thought that corporate governance worsened.
117 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: VIETNAM
(CONTINUED)
FIGURE 61. P
ERCEPTION OF HOW CORPORATE GOVERNANCE
HAS CHANGED OVER THE PAST TWO YEARS
Shareholders
33%
Remained the same
0%
46%
Don’t know
/ not sure
Improved
21%
Worsened
Professionals / Business Owners
44%
Remained the same
0%
50%
Don’t know
/ not sure
Improved
6%
Worsened
Management Executives
46%
Remained the same
46%
0%
Improved
Don’t know
/ not sure
8%
Worsened
Significantly higher than average
Significantly lower than average
The future of corporate governance in Vietnam appears very optimistic (Figure 62). Overall, 71 per
cent of all respondents expect corporate governance to improve, 23 per cent anticipate it will remain
the same, and 3 per cent expect deterioration. In addition, 3 per cent of respondents are not sure or
do not know how corporate governance will change in the future. There are no significant differences
between the three groups of respondents.
118 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: VIETNAM
(CONTINUED)
FIGURE 62. PERCEPTION OF HOW CORPORATE GOVERNANCE
WILL CHANGE IN THE FUTURE
Shareholders
31%
Remain the same
67%
Improve
2%
Worsen
Professionals / Business Owners
23%
Remain the same
67%
Improve
6%
Don’t know / not sure
4%
Worsen
Management Executives
15%
Remain the same
77%
Improve
4%
Don’t know / not sure
4%
Worsen
Significantly higher than average
Significantly lower than average
119 | CPA AUSTRALIA ASIA-PACIFIC GOVERNANCE SURVEY
MARKET RESULTS: VIETNAM
(CONTINUED)
In response to the open question “What would
you say is the most urgent issue that needs to be
addressed in relation to corporate governance
in Vietnam?” a number of themes emerged. The
top eight themes listed below represent 60 per
cent of all responses. Overall, 2 per cent said they
do not know. The most frequently cited issues
include:
• c ompanies face problems because of
corruption (such as insider trading and
breach of confidence) (10 per cent)
• c ompanies face problems because
of mismanagement (10 per cent)
• b
oards of directors are not effective
in discharging their responsibilities
are incompetent (9 per cent)
• a
lack of accountability (unspecified)
(8 per cent)
RESPONDENTS’ COMMENTS
“ FRAUDULENCE IN BUSINESS IS
THE MOST URGENT ISSUE IN
VIETNAM. MORE TRANSPARENT
AND EFFECTIVE LAW”
“THE BOARD OF DIRECTORS
AND MANAGING BOARD NEED
TO BE MORE RESPONSIBLE
FOR THEIR DECISIONS. NEED
TO GIVE MORE TRANSPARENT
INFORMATION”
• f raud is a big issue for business and dishonesty
(7 per cent)
• p
oor human resource management and lack
of skilful labour force (6 per cent)
• insufficient legislation, unstable regulatory
framework on corporate governance, and
many loopholes (5 per cent)
• a
lack of transparency such as company
management and government operation)
(4 per cent)
Overall, there is a lot of optimism about corporate
governance in Vietnam, more so than market
governance. The majority of respondents
consider corruption to be an important issue
in government and business, but they also
agree that appropriate institutions and laws and
regulations exist to enable good governance.
“CORRUPTION AND BRIBERY.
POOR GOVERNANCE,
LEADERS OFTEN MAKE
WRONG DECISIONS”