[EDITORIALS]CEOs taking the pledgeChief executive officers of some 800 firms listed on the Kosdaq are moving toward a public pledge of transparent management.
This is good news in light of the corruption by CEOs and accounting fraud that are blamed for the economic woes of the U.S. economy and the huge bankruptcies of Enron and WorldCom. To tackle the problem, the U.S. government has requested and received signed pledges from the CEOs of firms listed on the New York Stock Exchange that they are criminally liable in case of accounting fraud at their firms. With 630 firms having made the promise as of last week, the U.S. stock market has begun to rebound.
Domestic investors, too, are seeking transparency pledges. There is plenty of opaqueness on the domestic investment front. In the first half of the year, some 20 firms were hit with disciplinary measures from the nation's financial watchdog; just this month, the head of the nation's third-largest oil company was arrested for accounting irregularities.
The lack of investor confidence in the validity of accounting statements is why, despite record-breaking profits posted by listed companies in the first half, the Kospi remains in the doldrums.
Under this situation, getting CEOs to sign on to a transparency pledge should be a priority task. Even if it lacks the legal teeth of the U.S. document, it would no doubt strengthen public trust in corporations. The companies on the Kosdaq should go an extra step by making sure that the public pledge does not end up as a one-time event.
Complementary measures of nurturing specialists and amending accounting and public disclosure systems must be carried out. Those in the industry should also be on the lookout for that impulse to pursue short-term profits through tinkering with the books. More than anything else, the public pledge should serve as an opportunity for the CEOs to remind themselves, their companies' shareholders and retail investors that they are committed to honest management.
We urge the 1,500 firms listed on the Korea Stock Exchange to join this cause. There is no reason to hesitate to take a step in bolstering trust in the market.