South Korea’s ‘Unfriendly’ corporate governance disclosure to foreign investors

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ABSTRACT The Asian Financial Crisis of 1997 initiated an enormous structural change in South Korea’s capital market from its almost unregulated corporate governance regime to a more mandatory regime to accommodate foreign investors’ demand for market transparency and accountability. Corporate governance disclosure is essential for investors to monitor management decisions and exercise their rights on an informed basis. However, South Korea’s current disclosure requirements fall short of providing full, accurate, and timely disclosure in English to foreign investors who comprise approximately 30% of the shares listed on the Korea Exchange. By examining South Korea’s Code of Best Practices for Corporate Governance and the corporate governance disclosure report and comparing this to the recommendations of the ICGN Korea Governance Priorities report of 2022, this paper argues that while efforts to mandate corporate governance disclosure have been ongoing, efforts to make accurate and timely disclosure for the benefit of foreign investors are still lacking. More specifically, current disclosure practices are in danger of repelling foreign investors again post-1997 due to slow translation updates and lack of legal requirement for translation from Korean to English in the first place.