FSC calls for more transparent bookkeeping at companiesKorean companies need to boost transparency by reforming their accounting standards and overhauling corporate governance to regain investor confidence, the nation’s top financial regulator said Friday.
Choi Jong-ku, chairman of the Financial Services Commission, made the remarks during a meeting with chief executives earlier in the day.
Although some Korean companies have improved their management ethics, critics say murky business decisions and an opaque governance structure are two of the key reasons for the relatively low value of Korean stocks compared with other Asian peers.
“For institutional investors, key players of capital markets, to make mid- and long-term value investments, there is need for corporate transparency throughout accounting reform and a modernization of corporate governance structure,” Choi said.
Because of a lack of corporate transparency, Korean stocks are valued about 42 percent lower than global markets as of July, Choi said.
The Financial Services Commission is pushing for accounting reform because it is difficult for companies to independently do so, Choi said. The regulator plans to introduce tougher accounting rules by the year’s end.
Officials from the commission said an independent audit of the family-run conglomerates known as chaebol in Korea is difficult because of their opaque governance system.