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MELBOURNE
BRUNSWICK
BUNDOORA
FISHERMANS BEND
POINT COOK
HAMILTON
HO CHI MINH CITY
HANOI
Corporate fraud: Do western methods suit Asian business?
Can family ownership of a business and corporate governance work together side-
by-side? Does corporate governance in family business lead to higher earnings?
Research by RMIT University PhD graduate Yo Han An explores this in relation to
businesses operated in eastern societies.
“There is a perception that family-owned businesses in eastern societies don’t
have proper corporate governance and that they must be corrupt and fraudulent,”
Dr Yo Han An said.
“With the Asian financial crisis in 1997, family ownership in east Asian countries
was seen as corrupt and immoral, because business ownership wasn’t separated
from business management.”
After the Asian crisis, corporate governance functions, such as independent boards
of directors and audit committees, and separation of ownership and management,
as in the US, the UK and Australia, were introduced to almost all East Asian
companies and were expected to increase a firm’s value and earnings.
However, since then, notorious accounting frauds such as Enron and WorldCom,
as well as the recent global financial crisis, have happened in the US, despite well
organised corporate governance functions being in place.
“My research looks at how family ownership and corporate governance affect a
firm’s earnings. I found that family ownership had a positive effect on a firm’s value
and earnings, but that simultaneously, family ownership dominates corporate
governance functions,” Dr Yo Han An said.
In addition, the research findings indicated that high-quality firm value and earnings
are achieved by financial statement preparers, that is, the controlling family
shareholders or the ultimate owner of the business, not simply by corporate
governance functions.
“My conclusion is that high earnings quality requires well-balanced corporate
governance mechanisms and is achieved by financial statement preparers and not
by regulation. Consequently, corporate governance should be based on the whole
economic environment,” Dr Yo Han An said.
Along with more than 5,500 other graduates, Dr Yo Han An will celebrate his
achievements at RMIT’s spectacular Graduation Ceremony at Etihad Stadium on
Wednesday, 16 December.
For interviews or comment: Dr Yo Han An, (03) 9925 1391 or (03) 9530 9268.
For general media enquiries: RMIT University Communications, Deborah
Sippitts, (03) 9925 3116 or 0429 588 869.
11 December, 2009
NEWS 
