SGX tops index ranking governance, transparency

PHOTO: SGX tops index ranking governance, transparency

SINGAPORE - The Singapore Exchange is the most well-governed and transparent company in Singapore, according to a study of 664 locally listed companies released Thursday.

The bourse pipped telco giant SingTel - which had ranked first on the annual Governance and Transparency Index (GTI) since its launch in 2009 - by one point.

Rounding out the top five companies in the study were Keppel Corporation, Sembcorp Industries and Keppel Land.

Most companies improved on their GTI scores in the latest ranking.

The 2013 index, released at the Certified Public Accountant (CPA) Forum Thursday, showed that the mean score of all the companies rose to its highest ever at 38 points, up from 34.9 last year.

But a third of the listed firms (33.4 per cent) scored lower marks compared with last year due to insufficient and untimely disclosure.

Companies that ended up at the bottom of the list were typically smaller firms which had cited cost of compliance as the main reason for the lack of disclosure, said Associate Professor Lawrence Loh, the GTI project leader at the National University of Singapore Business School's Centre for Governance, Institutions and Organisations (CGIO).

"The gap between companies with good corporate governance and transparency and the 'laggards' seems to be widening," said Prof Loh.

But he added these firms are prepared to deal with the "trade-off" - to spend less on compliance cost and fare less well in terms of transparency.

Firms which ranked lowest on the index include Aussino Group and Eastern Holdings.

One finding was that the auditors of companies which ranked low on the list were less willing to provide qualified statements in their financial reports.

The index measures companies based on four key areas: board matters, remuneration, accountability and audit as well as transparency and investor relations.

Additional points may be awarded or deducted for good corporate governance practices. The maximum GTI score is 143.

The GTI is a collaboration between CPA Australia, CGIO and The Business Times.

Companies that perform better are usually from the financial and telecommunications sectors, as they have to comply with rules set by industry bodies, said Prof Loh.

Several family-owned businesses were in the top 20, including ASL Marine Holdings and ornamental fish retailer Qian Hu Corporation.

Media group Singapore Press Holdings was ranked 15th in a three-way tie with Keppel Telecommunications & Transportation and Neptune Orient Lines.

Chairman of the Accounting and Corporate Regulatory Authority Lim Soo Hoon said the senior management and board directors of listed companies had to lead by example and set standards for integrity and ethical behaviour.

"Setting the right tone at the top is crucial in providing effective governance and inculcating a spirit of accountability," she said.

Retail investors and shareholders can play their part in improving corporate governance standards here, Prof Loh suggested.

"Investors should be active in trying to engage the management," he said. "Show up at annual general meetings, pose questions that help you better understand how figures are derived."

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