By: Senen L. Matoto, FICD
Fellow
Institute of Corporate Directors
About 25 years ago, in the aftermath of the earth shaking bankruptcy of the mammoth publicly listed Enron in the US and the dissolution of one of the world’s largest accounting and auditing firms, Arthur Andersen, which caught thousands of investors off guard and the eye of regulators, inspired by the OECD Principles of Corporate Governance, the renowned economist, former NEDA Secretary and former Finance Secretary and now more popularly known as the Father of Corporate Governance, Dr. Jesus P. Estanislao, started to promote corporate governance in the business community in cooperation with key government and quasi-government agencies such as the SEC, BSP and PSE.
However, I distinctly recall thinking to myself that the private sector then, by and large, listened to the new corporate governance doctrine that Doc Jess was avidly preaching, feeling with a tinge of trepidation that these are more rules to follow. And probably with a sigh of reluctant acceptance telling ourselves, “Here we go again, more bureaucratic rules to comply with and forms to fill.” But with the SEC fully backing Doc Jess, the business community slowly started warming to the merits of corporate governance, particularly after a flurry of corporate scandals such as the US subprime mortgage crisis and, on the home front, BW rocked the business world.
Today, the importance of adhering to the principles of corporate governance has been further brought to the forefront with the Institute of Corporate Directors under the continuing guidance of Doc Jess the past 25 years. Last week, the mantle of leadership of ICD was passed to a powerhouse new Board of Trustees led by Chairperson, Tax Lawyer Benedicta “Dick” Du-Baladad; Vice Chair, Fintech Expert Ida Tiongson; yours truly as President and CEO; Treasurer, Ayala Chief Audit Executive Cathy Hufana-Ang; and Ambassador Jose Cuisia, IT luminary Henry Aguda, Marketing Communication whiz Donald Lim, former PwC Country Head Tammy Lipana, Securities Lawyer Tom Syquia, former Pepsico GM Maricelle Narciso, Payments Solution Expert JJ Moreno and Management Consultant Tonton Mapa.
The induction was marked by the new governance advocacy that Doc Jess has invited ICD to embark on, but this time with a focus on our capital market. All market practitioners are fully aware of the tepid state of our stock market that has been languishing for well over the past decade from the highs of the PSE Index 8500 plus to the current moribund 6000 level. Of course, we are all fully aware that the current tumultuous external environment of Trump’s MAGA moves and the continuing global armed conflicts in Ukraine and Gaza have not been conducive for business.
But let’s face it, there is no denying that we definitely have our own set of homegrown problems in this Year of the Snake as echoed by the event’s keynote speaker, a friend and another noted economist who now sits as a Monetary Board Member, Romy Bernardo, from the political gerrymandering circus to something as basic as not having a respectable number of listed companies.
Investing in the Philippines is unfortunately severely limited to literally only a handful of companies to choose from. We lag behind our neighbors in terms of number of listed companies; we have high friction costs; uncompetitive tax rates; cumbersome listing rules; non-existent secondary market support resulting in limited, if not eroded, upside valuations post-IPO; dismal investor financial literacy; and perhaps more fundamentally, a host of unconducive operating environment factors dissuading investments in important pillars of economic development such as in manufacturing and agriculture, making us basically a one-pony show which is the consumer sector vulnerably driven primarily by the millions of OFWs and the BPO industry. As a consequence, we are limited to perhaps a fraction of a percentage point in the assets allocation of the MSCI index, an insignificant blip in the investors radar screen.
Now what can ICD possibly do to help? Well, we in ICD firmly believe that good governance is key to unlocking the confidence of investors and by promoting the principles of good governance to hundreds of private companies and encouraging them to go public so their corporation’s valuations can properly receive their due share will appeal to business owners.
If investors are convinced that good governance principles are widely being practiced, there is no reason why we cannot have a thriving small companies index that has the potential to go multiple times its IPO valuation. But we need governance champions to be properly trained, exposed and hopefully taken on by corporations keen to professionalize and aspiring to go public.
With a revamped and energized board ably assisted by our new Executive Director, Catz Jalandoni, we hope to see more aspiring directors become members of ICD and be counted as Governance Champions!
Until next week… OBF!
For comments, email bing_matoto@yahoo.com.
Disclaimer:
On February 18, 2025, “Corporate governance champions” was published. It was authored by Senen L. Matoto, a fellow of the Institute of Corporate Directors.
You can read the original article through this link:

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