The Failure of Corporate Internal Controls and Internal Information Sharing (out of stock)

Although East Asian jurisdictions such as Taiwan have been adopting similar models of Anglo-American independent directors and audit committees in recent years, we can find that common issues are failure of internal controls, in general, and dysfunctional internal information-sharing mechanisms, in particular. To accommodate Taiwan’s reform trend towards furthering the adoption of independent directors and audit committees, this article offers a roadmap for conceptual solutions which are harmonic with each other as prerequisites to enable monitors of management to have the incentives and means to exercise their oversight. First, the board’s duty to monitor should be reiterated while being transplanted into corporate governance rules. Second, independent information channels should be established to enable internal governance information to flow to corporate monitors, thus facilitating their decision-making in oversight. Finally, external market forces should be channelled to safeguard internal corporate governance.