Most businesses in Taiwan are family-owned, and family members are the key managers and members of the board. Since the power of management and operation is mixed, some decisions based on self-interest may result in loss of the company and its shareholders, even financial crisis. The poor corporate governance issue in Taiwan was hidden for several years, and finally revealed since 1998, from Kuangsan Enterprise Group, American Furniture, Tong Lung Metal Industry Co., Ltd., Wan You Papers, Victor Taichung Machinery, to the recent cases of ProComp and Mosel Vitelic Inc., while most of which involved embezzlement to safeguard the stocks. The mixed power of management and operation has led to bankruptcy of companies, and significant loss in investors.
Therefore, to generalize a set of simple method to different companies with poor corporate governance, and provide an effective method to all investors, this study first selected listing companies with at least two independent directors and one independent supervisor, then chose 60 companies that showed no poor governance, and then compared with 10 companies with poor governance for analysis. This study then found the commonalities as predicting factors on poor governance, so as to minimize investment loss. Suggestions on the corporate governance bylaws were also proposed to present systematic methods, make the bylaws more comprehensive, and overcome internal and external barriers during implementation.
This study also analyzed the existing structure of the board, established a set of simple analytic tool based on percentage of seats, shareholding percentage, employee turnover rate, allocation of financial supervisors, and pledged shares of the directors and supervisors to promote the operating stability. The investors could utilize this tool to analyze the possibility of poor governance of the investment target, and minimize the loss.
|Date||01 August 2006|
|Contributors||Pei-how Huang, Pei-how Huang, Tai-Hwa Chow, Te-ping Kuo|
|Source Sets||NSYSU Electronic Thesis and Dissertation Archive|
|Rights||not_available, Copyright information available at source archive|
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