Corporate Governance is as important as profitability
Corporate governance is crucial for a public company and should not be considered as inferior to profitability. Misconduct within a registered company not only affects the stakeholders’ gains and losses but also impacts confidence in the Thai stock market.
It is extremely disheartening when instances of misconduct occur in private companies, especially within companies registered with the Stock Exchange of Thailand (SET). A case in point is Stark Corporation Plc, which risks being delisted due to faulty financial statements.
When the company's management decides to raise capital in the stock market, it signifies an expansion of their responsibility towards the company's operations, encompassing a larger number of stakeholders, including common shareholders, debenture holders, as well as company employees and customers. These stakeholders constitute the origin of the term "public company" and must be acknowledged by the company's management and be subject to scrutiny for the benefit of the stakeholders.
Instances of misconduct within registered companies in the stock market persist but the number of violations or penalties is fewer than actual occurrences of misconduct. This means that there are numerous cases of wrongdoing or misconduct by companies that have not been audited, nor held accountable legally, and some companies continue to engage in unlawful and unethical practices. They claim that what they are doing is correct, either because no one has detected the wrongdoing or because it has not been legally penalized.
Dressing up financial statements creates an illusion of reality. The Accounting Profession Act of 2018 states that accounting professionals must adhere to fundamental principles of ethics, requiring them to act with honesty, integrity, fairness, and independence, without compromising or allowing bias or undue influence from others to override professional or business judgment.
The company's board of directors has numerous programmes for training to enhance the capacity of directors or company executives and many of these programmes emphasize the importance of corporate governance. The Securities and Exchange Commission (SEC) has consistently advocated for this matter to protect shareholders. However, in the case of Stark Corporation Plc, the failure of corporate governance is clear.
Misconduct within a registered company not only affects the stakeholders' gains and losses but also impacts the confidence in the Thai stock market. The government has encouraged companies to continuously raise capital in the stock market. In the end, the lack of stringent supervision and the release of loopholes lead shareholders to face dire consequences or seek survival on their own.
Therefore, regulatory bodies should enforce laws rigorously in all cases to promote a truly reliable stock market where companies raise capital.
(This editorial first appeared on the website of The Nation’s sister paper, Krungthep Thurakij, on June 20)
