Good governance helps attract investment: expert

CA - Good corporate governance is a good way to improve a company’s performance and to attract more investment from overseas investors, but this issue has not been adequately attended to in Vietnam, said an expert at a seminar held in HCMC on Thursday.

Vietnamese companies with good governance would be better positioned to attract external financing and increase profitability, said David Gerald, President and CEO of the Singapore Securities Investors Association, at the seminar “Corporate Governance – The Way to Create Company Value.”

Gerald explained that investors are willing to pay more for the shares of well-governed companies, and are taking the initiative to evaluate the presence or absence of corporate governance safeguards, as well as corporate cultures, at the companies in which they invest.

“A study shows that best-governed companies have returns on investment and equity better than those of poorly-governed companies,” he told the seminar organized by Kim Eng Vietnam Security Stock Company and the HCMC Stock Exchange.

According to Gerald, in Asian countries, companies are mostly formed by the family where corporate governance is lacking for they just care about the profit of their own.

“But when they move out into the market, they have to improve their governance to meet the global and local standards,” he said.

He explained that good corporate governance provides a climate conductive to the orderly development of the capital markets and meet the increasing expectation of investors.

Gerald highlighted Singapore as the number one in corporate governance because it attracted more overseas investment than the second one, Hong Kong, for “investors know that they will be accountable.”

In 2010, the International Finance Corporation launched a Corporate Governance Scorecard for Vietnam, reviewing the corporate governance practices by exploring compliance with laws and regulations of the best 100 largest companies listed on the Hanoi and HCMC stock exchanges. The result showed that 80 of them were found below average.