ADB says Phl lags in disclosure by listed firms

MANILA, Philippines - Listed companies in the Philippines recorded higher ratings in terms of corporate governance and investor protection efforts last year, a development that will help attract more investors in the country.

But publicly listed companies (PLCs) in the local bourse were found lacking in disclosure and information dissemination compared with its Southeast Asian counterparts, an issue that should be resolved ahead of the regional economic integration in 2015, the Asian Development Bank (ADB) said.

In the Asean Corporate Governance Scorecard’s country reports and assessments 2013–2014, the median score of 252 firms listed in the Philippine Stock Exchange improved to 58 last year from 48.91 in 2012.

Corporate governance principles provide guidance on how corporations should operate. Adoption of international corporate governance best practices leads to long-term sustainability and resilience, and can be a competitive tool to attract foreign investments, the ADB said.

Higher average scores on a year-on-year basis were recorded for the role of the stakeholders (4.85 points in 2013 from 2.80 points), disclosure and transparency (16.03 points in 2013 from 13.58 points), and responsibilities of the board (19.71 points in 2013 from 16.36 points), equitable treatment of shareholders (10.71 points in 2013 from 11.06 points), ADB said.

However, the average score of Philippine PLCs in terms of shareholders’ rights slightly decreased to 5.55 points last year from 5.60 points in 2012.

“The improvement in scores for the top 100 Philippine PLCs is the result of the annual corporate governance report and the efforts of the Institute of Corporate Directors to educate them on the methodology of the Asean Corporate Governance Scorecard,” ADB said.

“The Securities and Exchange Commission (SEC) remains committed to good corporate governance among PLCs and will take more steps to encourage them to be fully compliant with international standards,” it added. The SEC is the official Philippine representative to the Asean Capital Market Forum (ACMF).

However, the Philippine PLCs posted relatively low scores amid “lack of adequate disclosures compared to their counterparts in other Asean countries, particularly on company websites,” the report read.

“There is a perception that potential investors have difficulty navigating mainly due to the variety of formats and content employed from company to company,” the ADB said.

Such issues should be addressed by 2015 as more companies gain a greater awareness of the corporate governance scorecard and its process while the SEC has already introduced a template and common content for websites, the lender said.

The country report, a joint initiative of the ACMF and the ADB, aims to raise corporate governance standards and practices of Asean PLCs, showcase and enhance the visibility as well as investability of well-governed Asean PLCs internationally, and complement the other corporate governance initiatives.

“Excellence in corporate governance is an important and strategic component in promoting Asean as an asset class and in the overall development of Asean capital markets,” said Datuk Ranjit Ajit Singh, chairman of the Securities’ Commission Malaysia.

“This corporate governance initiative, which complements other initiatives under the Asean Capital Market Forum reflects the collective and strong commitment by Asean member countries to achieve convergence as an Asean Economic Community by 2015,” he added.