Investors pay a premium for the shares of well-governed companies in Thailand, as they do for the shares of such companies in other emerging markets (see "A premium for good governance"). In our study of the 100 largest companies that are listed on the Stock Exchange of Thailand (SET), we found examples of both very good and very poor corporate-governance practices. Those companies with the best overall corporate-governance performance had average market valuations that were 45 percent higher than the average for companies in the bottom quartile (Exhibit 1). Our research¹ suggests that companies with poor governance scores could boost their market valuations by improving their performance on any of the following dimensions (Exhibit 2).

• Board oversight: Thai companies, averaging 74 out of a possible 100 points, scored highest on measures of the responsibilities and structure of boards. Nearly all of these companies have a board audit committee; on three-quarters of the boards, nonexecutive directors constitute a majority; and 22 percent of the boards have independent chairs. Still, there is room for improvement, since few nonexecutive directors are truly independent; most have other ties to the companies or their dominant shareholders. Furthermore, few...