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A Study of Transformation Strategy and Corporate Governance of Taiwan's Construction Industry
construction industry,transformation strategy,information transparency,corporate governance,
|Publication Year :||2009|
Construction industry is a leading economic indicator and is closely tied to the development of related industries. Taiwanese industries need to adopt flexible strategies in response to the economic changes for several reasons- (1) competition within its own industries, (2) increase in price index due to government deficits, and (3) fierce competition for large scale public construction (i.e. Public Transit System and/or High Speed Rail) from both domestic and international companies. As a result, it has become more apparent and critical that construction firms establish sound strategies. Furthermore, the government now requires listed companies to practice better corporate governance; family-size construction firms will now need to establish corporate structures in order to incorporate better governance procedures.
This research is to collect and understand information on the changing strategies and structures in corporate governance for Taiwanese listed construction companies starting 2003 through 2007. By using the evaluation system for disclosure from Security and Future Institute, the research will further evaluate the extent to which each company discloses this information and will analyze firms’ latest strategies and corporate governance structures. Also, the study will help understand the relationship between corporate governance structure vis-a-vis with the transparency of information.
The results from this study are as follows:
1.Most construction companies went into initial public offering (IPO) in the 1990s. This was a result of the industry and market changes.
2.For continued existence, firms pursued low-cost production, established sound management systems, and improved efficiency and working procedures.
3.Firms showed different stages in re-positioning their strategies (i.e. different set up dates, utilization of their capitals and assets, and construction experiences).
4.The separation of management and ownership is a predictable trend in the future. In the industry, most shareholders possessing major shares also control the most of the seats in Board of Director, so they could invite appropriate and professional managers to enter the Board of Director in order to make professional and objective operating decisions. Through professional managers running the operation of the company, the company has separated the ownership and management.
5.Factors that raise companies’ willingness to disclose information and boost the transparency of information:
a.Spontaneously and gradually improve the structure of corporate governance and establish committees for different operating functions in order to sustain and expand the company for growth of business in the future.
b.Due to the needs for operation and internationalization, companies start to reinforce the management and the integration of internal and external information and resources.
c.Under the circumstance of separation of management and ownership, the Board of Director controlled by the major shareholders would require more managerial information to evaluate the performance of managers, increasing the transparency of information.
d.Independent directors, who need to comply with regulated obligation or make professional decisions, often demand managers to provide complete and accurate managerial information on time and increase the transparency of information to reduce agency costs.
e.In capital market, investors would give higher premiums for companies with better transparency of information to encourage their emphasis on that part.
It is with hope that this research study will help constructing companies to make correct decisions when they are faced with issues relating to resource evaluations, corporate strategy, and firms’ corporate governance structure and operating strategy.
|Appears in Collections:||會計與管理決策組|
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