Compliance to Corporate Governance among Publicly-listed Companies in the Philippines

In the present corporate world, code of governance plays a major role in assessing a company's strengths and weaknesses. A company which implements a sound corporate code of governance tends to maximize the quality of its assets and enterprise value with respect to its shareholders. Such company also gives the impression of transparency and fairness in dealing to all stakeholders. The study randomly selected and downloaded thirty publicly-listed companies with annual reports in 2012 in the Philippine Stock Exchange (PSE) to answer the research instruments specially developed for the study. The paper used descriptive-quantitative design. Frequency and percentage method and ANOVA were used to determine the significant difference between the independent and dependent variables. The results revealed that companies’ characteristics have no significant difference and did not influence the level of compliance to corporate governance among the respondents. Nevertheless, most businesses that are publicly-listed have high compliance to the requirements of the Securities of Exchange and Commission (SEC) particularly to the compliance, communication and reportorial processes in order to operate efficiently, to attract potential investors and to disclose information about security risks and associated events to protect the interest of the shareholders.


Introduction
An organization which has effective corporate controls will most likely prevent any conflict of interest between those insiders who directly manage company affairs and those passive investors. Without constant disagreements and doubts inside the organization, it will lead to enhance the firm's value and improve its management efficiency. By implementing good governance, a firm can provide relevant information to external users through quality financial reports [1].
Based on the study of Koehn and Ueng [2], one cannot distinguish whether a good financial information provided came from a company that practices strong corporate governance or not. Even firms with poor corporate governance can also produce good reports. However, Faber [3] discovered that a company which had experiences in committing fraud in one way or another find it difficult to overcome the stigma for a long time, even after correcting its ways by practicing good governance. Hence, it is still doubtful whether those which practice good governance in a corporate environment can achieve the ultimate goal of producing more accurate and transparent financial reporting.
There have been a number of valuable studies in corporate governance and these studies are more on the impact of corporate governance on the financial performance [4] and compliance with modern legislations to corporate governance and its implementation in the companies [5]. However, none of these provided the compliance to corporate governance among publicly-listed companies in the Philippines.

Framework
This study was anchored in the study of Sarbanez-Oxley Act [6] which was a by-product of the corporate governance challenges in America. It posited that it is the management's responsibility to establish structures and procedures for financial reporting at the same time maintain adequate internal control.

The Philippine Securities and Exchange Commission (SEC) [7]
issued Memorandum Circular 2, also known as the Code of Corporate Governance. The Code aims to encourage reforms in corporate governance in order to develop the capital market, lift-up investors' confidence in the market and as a result sustain the growth of the economy as well as the corporate sector.
Further, Kothari expounded that the quality of accounting information is not only influenced by the quality of accounting standards but also constituted by the nature of corporate governance. The legal system and the existence and enforcement of effective laws that govern the accounting standards are IFRS and conceptual framework. This consequently highlights the important role played by corporate governance in shaping the quality of financial reporting in organizational settings and in ensuring credibility and integrity of the governance. Many users of financial information are interested in the performance and potential of one particular part of the company's operations or the other, rather than the company as a whole.

Data gathering procedure
The sampling plan included 30 annual reports of publicly-listed companies that have been taken in the PSE web site.

Results and Discussion
As observed in Table 1, 66.67% of the respondents belong to service industry. Service industry tops most in the publicly-listed companies, 46.67% of the respondents have been operating more than 50 years, and 56.67% of the respondents have more than 10 billion assets.

Descriptive Characteristics
Frequency Percentage (%)       Tables 3.1 to 3.3 revealed that the level of compliance to the code and the companies' characteristics are not related to each other. It means further that one will not depend on the other and the companies' characteristics will not affect the level of compliance to the code of corporate governance. For this reason, there was an acceptance of the null hypothesis which states that there is no significant difference of the level of compliance to corporate governance when respondents are grouped according to profile.

Conclusion
According to statistical results, in terms of compliance, communication and reportorial processes, the level of the companies' compliance to corporate codes have been highly complied. In determining the significant difference in the level of compliance to corporate governance when respondents are grouped by profiles, the proposed hypothesis has been accepted that there is no significant difference between the main and moderating variables. This means that their profile does not affect or does not have an impact on their compliance to the code.