Include corporate governance awareness in investor education

Investor education for the general public has grown in importance over the past decade after the US sub-prime crash of 2008 and on mounting concerns over whether individuals in an ageing society will have sufficient funds to retire comfortably.

In response, many public and private sector initiatives have been launched to teach the public how to save and invest wisely and, more recently, how to recognise and avoid investment scams. This is commendable and has undoubtedly helped elevate financial understanding across the population. However, these programmes focus mainly on traditional finance - money management, responsible saving, avoiding debt traps, investing for the long term, features of financial products, financial statement analysis and so forth. While it is vital to equip lay investors with such knowledge, in recent years it has become apparent that there is a need to add an equally-important dimension to minimise the risk of loss: awareness of the role of good corporate governance.

This is important because while basic investor education aims to direct individuals to save more and invest carefully, governance education on the other hand, is broader and goes beyond finance-based principles. It recognises that companies are only as good as their employees, and that the senior management and the board are particularly key. Governance education therefore trains ordinary investors to understand and discuss the following: the norms and practices that constitute good governance, the sources of information that can be tapped to evaluate whether a company is well-governed, the available means to influence firms if necessary, and the available protections for minorities.