Examination of the Singapore Code of Corporate Governance and its Impact on Corporate Reporting and Investor Perception/Decision

ABSTRACT Thirty companies with market capitalisation above two hundred million (Sin$200million) as at 1 July 2006 were selected from the Singapore Stock Exchange (SGX) Main Board. These thirty companies represent 7.5 percent (%) of the population of the SGX main board. The latest annual reports (2005) for these companies were downloaded from the SGX website. These companies were chosen for this study because institutional investors are likely to have strong interest in them. The second part of the study was to determine the investor perception on the quality and effectiveness of the listed companies in the SGX. A total of 5 investors agreed to participate in the survey. 2 respondents were from foreign banks viz., Credit Suisse and Citibank, 1 respondent from a local bank DBS, 1 respondent is a risk management analyst at Ernst and Young Singapore and 1 respondent form the Investment Management Association of Singapore (IMAS). The corporate governance scorecard from the author's study revealed a high compliance with the Singapore Code of Corporate Governance. The median being 100%, and average 72.71%. The 72.71% achieved in this study is indicative that 4 years thence, the level of compliance has improved significantly albeit in larger companies. Second, these larger companies have significant government ownership, therefore ensuring greater compliance to the Code. Equally important is that majority of these larger companies used in this study were audited by the 3 big accounting firms. The author's observed significant proportion of the investor respondents (75 % of the respondents) disagreed that the corporate governance stated in the annual reports were clear, accurate, up to date, complete and not misleading and significant proportion felt that the corporate governance practices of Singapore companies are not consistent with that documented in the annual reports. 60% of the respondents in the author's study, rated the overall corporate governance in Singapore 3 out of 5