The role and the responsibilities of corporate treasurers have been fast evolving in the recent past. Their role now extends in implementing good corporate governance strategies at various organizational levels. The recent examples of corporate governance failures, which include the South East Asian crisis and the debacle of giants like Enron and Tyco, have made companies to increase their financial transparency by providing appropriate and in time communication to their shareholders. It is being observed that legal protections can play a supporting role in promoting good corporate governance.
The role of the corporate treasurer has increasingly come into the public gaze over the past decade as companies increase the level of financial information and communications to shareholders. Many of the world's leading stock markets now require listed companies to provide regular briefings on their performance, announce price sensitive information in a timely manner and implement control systems to minimize corporate malfeasance. The corporate treasurer's "tool kit" now includes skills in implementing corporate governance practices at various levels of the organization, and the ability to relate to the wider set of firm responsibilities to external equity and debt providers. In a business world that is increasingly becoming international and interdependent, the skills in implementing corporate governance to protect shareholder value is an activity that benefits from regular updates on the state of academic research.
This article reviews recent international corporate governance research on two, mutually reinforcing, types of investor protections: firm level corporate governance procedures and country level laws and regulations. These two types of protection are connected and is seen most clearly in recent examples of corporate governance failures in South East Asia (1997-98) and the United States of America (2001-02).
The 1997 Asian economic crisis witnessed systemic corporate failure, financial collapse and major organizational restructuring. Large companies operated as closely-held, inter-locked companies with little regard to transparency to outside shareholders (often minorities) or to investment discipline. Poor performing divisions were cross-subsidized beyond economic justification and financial resources were expropriated by management to further their own goals.
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