Asian Corporate Governance Association: Stemming a "Race to the Bottom" by Stock Exchanges?
This case describes the movement towards dual-class listings on Asian stock exchanges and the efforts of the Asian Corporate Governance Association (ACGA), a not-for-profit shareholder advocacy group, to discourage this trend. As a not-for-profit organization with no formal regulatory or incentive setting powers, ACGA had been successful in helping to elevate the governance standards in Asian capital markets through its advocacy work, educational efforts, and its biennial publication ("CG Watch") that rated Asian countries' corporate governance quality. With the 2018 decisions by Hong Kong and Singapore to allow for dual-class share listings, which ACGA and its members have previously strongly opposed, ACGA worried about how it could prevent corporate governance standards in the region from deteriorating. Was this a "race to the bottom" by Asian stock exchanges due to their desire to attract listings, or were the proposed safeguards effective in balancing shareholder rights against protecting managers from market pressures? What additional levers of influence should the organization pursue to ensure that shareholder rights were protected or to make corporate governance less of a compliance exercise but more of a value-add in the eyes of corporate managers in Asia?