October 3, 2018
FTI Consulting has been reviewing corporate disclosure practices in different jurisdictions, making a distinction between mandatory and voluntary disclosure standards. Mandatory standards are legalistic, covered as required compliance, and adherence to them is a matter for legal practitioners and enforcement agencies. This report deliberately looks beyond mandatory standards and focusses on non-financial voluntary disclosure, in keeping with the direction of disclosure regulations in other jurisdictions and with an eye on institutional investor expectations. e.g. metrics for board evaluation or whistleblowing incidents reveal a transparent corporate culture.
This ASEAN Disclosure Index report reviews non-financial, voluntary disclosures and creates comparable benchmarks, with an eye on upcoming and anticipated disclosure regulations. It is a non-commercial, public research initiative by FTI Consulting that seeks to quantify and frame the ever-increasing standards of voluntary disclosure, in the form of an industry benchmarking report. It does not seek to be exhaustive or create a definitive measure of corporate disclosure or governance practices. It would be amiss not to mention efforts of the ASEAN Capital Markets Forum and the ASEAN Corporate Governance Scorecard which serves as a benchmarking toolkit for corporate governance for listed companies in the region.
The report splits 12 voluntary disclosure parameters into three categories (see Research Methodology on page seven) which reveals more information about performance (Performance Disclosure), board quality (Board Quality) and risk management (Risk Disclosure) and assigns weights to create a Composite Disclosure score, that has been applied to 180 ASEAN companies listed on seven stock exchanges across six different jurisdictions. Suggestions to improve the methodology are invited and will be incorporated in future editions of the report. The author of the report has reviewed 2017 EU regulations on non-financial disclosure, ESG disclosure demanded by institutional investors and existing corporate governance policies in the region prior to the preparation of this report.
The report focusses on aggregates of disclosure data, rather than on individual companies. The emphasis is on how the 180 ASEAN companies, taken as a group, disclose voluntary and non-financial information, though leading examples have been mentioned. Working with a smaller number of publicly available disclosure parameters, allows one to identify improvement areas as well as best practices.
• Overall, companies in the ASEAN region score well on corporate disclosure – evident from the 7.8/10 average Corporate Disclosure for all 180 companies. The average Board Quality score is at 3/4, while the average Risk Disclosure score is at 3.8/5.
• 13% or 24 companies are Disclosure Champions, i.e. they secure a 10/10 Composite Disclosure score.
The ASEAN Disclosure Index report also aggregates disclosure scores for each parameter, to identify parameters where the companies score well and where they do not. The report reveals the following:
1 Constituents of the FTSE ASEAN Stars Index, as on June 2018. This has 30 companies each from Singapore, Malaysia, Thailand, Indonesia, Philippines and Vietnam. FTSE ASEAN Stars Index is a proprietary property of the London Stock Exchange Group plc.
2 Constituents of the FTSE ASEAN Stars Index, as on June 2018