Unlocking Potential Through Corporate Governance

by Mark Mobius, for Investment Adventures in Emerging Markets, January 21, 2010.

We are having our global analyst conference this week where members of our portfolio management and research team gather together to discuss emerging trends and challenges.

As many companies now begin their new financial year, I would like to make a case on why improving corporate governance should be at the top of every company’s agenda. One of my readers, James from the UK, recently asked whether corporate governance and transparency is becoming less of an issue, given that he had seen improving standards in emerging markets. I think corporate governance should always be at the top of investors’ minds when they invest in any company, be it in emerging or developed markets. Assuming otherwise might cause an investor to be blindsided, as seen in former U.S. and European corporate scandals.

With greater globalization and new markets opening up, the emphasis on corporate governance is increasing as more efforts are being made to attract foreign investments. Accountability to shareholders and the need for transparency today form the backbone of the trust that investors have in a company, even though the concept of “corporate governance” has been recognized in the past. These areas of focus also provide the foundation for a management system that not only works smoothly but also increases the efficiency and effectiveness of companies, by having a high degree of awareness and information flow…(continue reading)

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