The Next Stage of Reforms: Korean Corporate Governance in the Post-Asian Financial Crisis Era

Following the 1997 financial crisis, Korea underwent a dramatic overhaul of its corporate governance framework. Drastic changes in its legal and regulatory infrastructure led to more transparent and accountable companies. Boards of directors, shareholders, stakeholders, and auditors began to function effectively and even a corporate control market emerged. Many forms of internal and external corporate governance and market-oriented discipline were established. Korean companies are poised to make a quantum leap to reach the most competitive international levels of corporate governance. This paper argues that Korea must continue its reform efforts. It first discusses the Asian financial crisis and the first stage of reforms that followed. It then explores the areas where Korea needs to undergo the next stage of reforms. It will argue that only then can Korean corporations receive proper valuations. Korean companies have indeed come a long way but lingering perceptions of weak corporate governance thwart them from becoming world-class competitors.