earticle

영어

This paper deals with the improvement of corporate governance system by emphasizing the enhancement of efficiency through the protection of minority shareholders󰡑rights and management monitoring. Some issues on the current corporate governance system such as management monitoring by the board of directors, the markets and institutional investors are criticized and policy options for the improvement are proposed as follows. First, the ex ante controlling mechanism should be strengthened by securing the independence and quality of outside directors. At the same time, ex post controlling system such as judicial remedy should be established, if shareholders󰡑rights are damaged. For that purpose, it is desirable to introduce class action suits. Second, the conditions of remedial procedures for damages should be eased to some considerable extent as they are still believed to be unrealistic. Third, the function of management monitoring by institutional investors as the dominant outside shareholders should be strengthened because most of firms are dominated by a single family and faced with restrictions of self-control. Fourth, management discipline such as hostile takeover should be activated as it performs a complementary function for internal governance system. Finally, illegal transactions between the firms under the same control should be prohibited definitely as they enable to divert resources inefficiently from one to another.