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Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 13, No. 3, pp.215-223
ISSN: 1225-0279 (Print)
Print publication date 31 Aug 2000
Received Jan 2001 Revised Feb 2001

A New-Institutional Economics Perspective of Corporate Governance Reform in East Asia

Sung-Hee Jwa
President, Korea Economic Research Institute, FKI Building, 28-1, Yoido- dong, Yeongdungpo-ku, Seoul 150-756, Korea, Tel: +82-2-3771-0004, Fax: +82-2-785-0271 shj@keri.org

JEL Classification: B25, G32, L22

Abstract

In this brief paper, we demonstrate that corporate governance structures as well as the distinct roles of government and private corporations in economic systems may be propitiously modeled from the new-institutional economics perspective. Our theoretical model and analysis leads us to strongly suggest that East Asian governments limit the scope of public policy so as to determine the institutional environment for corporate governance structures while leaving the details of internal control systems to be decided upon by the corporations in the pursuit to maximize their survival probabilities. Furthermore, for good corporate governance in this part of the world, not only the internal control systems but even more urgently the external control mechanisms, should be firmly established and strengthened, without losing sight of the prevailing economic and cultural values.

Keywords:

New-institutional economics, Corporate governance reform, Internal versus external disciplinary systems, Cultural values as institutions

Acknowledgments

Ideas in this paper was presented in the opening address at the 8th Seoul Journal of Economics International Symposium held on 25 August 2000 under the theme ‘Corporate Governance and Restructuring in East Asia.'

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