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Asia Pacific

Japan overtakes Hong Kong in corporate governance rankings, while Hong Kong plummets

The Asia Corporate Governance Association (ACGA) has released its latest report on corporate governance in the Asia Pacific region, which shows a significant shift in the region’s corporate governance rankings.

Japan overtook Hong Kong as the second best performer in the region, while Hong Kong slipped to sixth place. This is a significant shift from previous rankings, in which Hong Kong consistently came out on top.

ACGA attributes Japan’s rise to its continued efforts to improve corporate governance through specific measures and programs over the past decade. These efforts have created a more investor-friendly environment and helped the Japanese economy emerge from deflation.

On the other hand, Hong Kong’s recent focus on market development has come at the expense of quality and investor protection. The weighted voting mechanism that allows mainland Chinese technology companies to list in Hong Kong has been criticized for undermining equal voting rights for all shareholders.

Japan overtakes Hong Kong in corporate governance rankings, while Hong Kong plummets

In addition, Hong Kong’s erosion of freedoms has had a negative impact on corporate governance. The stifling of the media, academia and public discourse has created an environment where accountability and transparency are greatly diminished.

While other markets such as Taiwan, India and South Korea have also improved their levels of corporate governance, Singapore and Thailand have seen a slight decline. Australia remains at the top of the list, while China, the Philippines and Indonesia continue to lag behind.

Despite Japan’s impressive performance, ACGA warns that its score of 64.6% is still a ‘poor score’ that barely passes. The main reason for the rise in the rankings is the poor performance of other markets rather than any significant improvement in Japan’s corporate governance practices.

ACGA recommends that all markets in the region continue their efforts to improve corporate governance in order to create a more transparent, accountable and fair investment environment.

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