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

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.