Corporate Services CEO: Firms without good corporate governance face high risks
PETALING JAYA: Companies without a good corporate governance structure usually face higher inherent risks, said Boardroom Corporate Services (KL) Sdn Bhd CEO Samantha Tai.
“Corporate governance is increasingly valued by investors nowadays because companies without good corporate governance will tend to have very high risks. This is because there is no proper check and balance,” Tai told StarBiz at the Star Empowerment seminar yesterday.
“It also indicates that companies are not being managed properly. That is why all the more these days you need this check and balance. Investors nowadays want the information in the annual report to be more meaningful and this can be done through integrated reporting,” she added.
Tai said good corporate governance must start from the top management of any company and that both directors and company management should implement best practices that promote integrity, transparency and accountability within the firm.
“Companies with good corporate governance will see a buy in of these concepts from the top. If there is no buy-in from the top, then it would merely be a matter of compliance. In order to have substance, the tone must be set from the top management and then this will (positively) impact the (corporate) culture of the company,” she said.
“The chairman of the board is responsible in terms of promoting a culture of good corporate governance in the firm. Once you get that right, then instantly one will see its positive effects all the way down in terms of risk management, internal controls and strategic planning,” Tai added.
Meanwhile, Tai said integrated reporting could attract more people especially investors to readily get information from the annual report.
“Not many investors get information from the annual report because right now the information in the annual report tends to be in bits and pieces.
“There is no linkage, so it is not meaningful at all and investors don’t really rely on the annual report.
“The question is to improve this further and this can be done by integrated reporting,” Tai said.
“So information in the annual report must be more meaningful. Such as risk management, to give more disclosure can include detailing its weaknesses, findings or areas of improvement.
Also disclosing the implementation: the key word is how effective are all these controls and risk management and the board,” she added.