The country lags on whistleblowing and anti-graft enforcement stops at its borders.
Hong Kong needs to make some adjustments in some areas of corporate governance as it continues to struggle in aspects such as whistleblowing and anti-graft enforcement stops at its borders according to the Asian Corporate Governance Association (ACGA).
ACGA said that despite ranking second in the CG Watch 2020 study, it is still well below where it should be at this stage.
“At the risk of repeating themes from our last few CG Watch reports, Hong Kong is at its most determined when addressing regulatory and enforcement issues, but loses its nerve when it comes to driving fundamental improvements in company governance. Issuers are treated with kid gloves, especially when it comes to amending the CG Code,” the report said
The study observed that even after 20 years of reform, the corporate sector has shown limited willingness to adapt to high governance standards.
“Compliance with the Hong Kong CG Code may be high in a formal sense, yet the cultural mindset among many family businesses is one of conservatism regarding new CG ideas. One tangible outcome is that few local companies are seen as leaders in this field – and there is little competition to be the best. Indeed, a sense of deja vu permeates the winners’ lists of local awards and surveys,” the study added.
Meanwhile, ACGA saw improvements by the Hong Kong Monetary Authority (HKMA) on responsible investment and stewardship, which in turn sparked a bit more action among domestic investors. It also lauded HKMA on the creation of an independent audit oversight board that gave a boost to the country’s scoring.
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