A regulatory framework should also reward good governance

EVER since the local stock market moved towards a disclosure-based regime, the approach adopted by regulators here to ensure compliance by listed companies to the rules has been mainly through queries, warnings and public reprimands.

This wielding of a regulatory "stick'' to ensure that companies adhere to the rules is fine but there is a danger of an over-reliance on deterrence only, without balance coming from regulatory "carrots'' or suitable incentives to encourage companies to practise good governance on their own accord.

Rather than simply rely on punishments to keep the market in order, it is worth considering giving rewards to firms that have consistently exhibited good corporate behaviour. In this connection, the examples of Bursa Malaysia (BM) and the US should prove useful.