Hong Kong regulators should make a greater effort to educate companies on how to improve standards of corporate governance because legislation alone may not be enough, according to experts. Judy Tsui Sin-lai, deputy chairman of the Hong Kong Society of Accountants, said corporate governance was about a change in mindset and culture, as it enhanced the quality of financial activities. Professor Tsui is head of the accountancy department at the City University of Hong Kong. 'It's not only about regulation and legislation in order to improve corporate governance - it's a change in mindset, organisation structure, culture and integrity of management,' she said. 'The quality and integrity of management is very important.' Ths issue of corporate governance has come to the fore after the Enron accounting debacle and the foreign currency trading losses worth US$750 million uncovered at Allied Irish Bank's United States subsidiary. Most Hong Kong-listed companies are family run and the role of families in their affairs has come under increasing scrutiny, mainly because the companies lack transparency and the interests of minority shareholders are often undermined. Professor Tsui said the major weakness of such companies was a lack of accountability in terms of disclosure and the quality of disclosure. 'In Hong Kong, it is particularly difficult as most listed companies are family owned. The unique ownership structure makes corporate governance more difficult,' she said. 'For example, there should be disclosure of directors' remuneration, which is also part of the transparency problem.' Professor Tsui said these companies should be made to understand that greater transparency could make investors more confident, which could enhance share value. 'Corporate governance is not about control, it's about survival and maximising share value,' she said. PricewaterhouseCoopers partner Duncan Fitzgerald has a similar view. He suggests three approaches to improving corporate governance: non-prescriptive, prescriptive and educating investors. The non-prescriptive approach is to provide more guidelines, peer pressure and investor pressure on companies to disclose information, whereas the prescriptive approach is to improve corporate governance by law or regulations. Mr Fitzgerald said education was also important, especially for retail investors as they accounted for a relatively high volume of trade. He said not all companies were willing to follow guidelines set by regulators. This is especially true of family owned businesses, which might not be willing to disclose all relevant information to shareholders. If the prescriptive approach alone were applied, most companies would comply with the rules and regulations that they were bound to by law, but would not go much further in their disclosure. 'Improving corporate governance in Hong Kong might be achieved through a mixture of the two approaches - but striking the right balance is the key,' Mr Fitzgerald said. Although some investors tended to treat the stock market as a short-term speculation vehicle, Mr Fitzgerald said there was no reason not to educate those who wanted to learn about good corporate governance. He said Hong Kong should move fast to upgrade its standard of corporate governance to stay competitive internationally. He said China was starting to close the gap on developed markets, including Hong Kong's. Mainland authorities announced last April that China's listed companies would begin issuing quarterly reports this year. Mr Fitzgerald said he expected improvements would be made to Hong Kong's corporate governance laws this year as regulators recognised that action should be taken. Hong Kong Exchanges and Clearing released a consultation document last month to get input from various parties on improving corporate governance in Hong Kong, and the Financial Services Bureau has commissioned studies on the topic. On Thursday, Financial Secretary Stephen Ip Shu-kwan said the Government would push for corporate governance reforms following the collapse of Enron. However, David Webb, editor of Webb-site.com, which has long campaigned for better corporate governance, said the reform of Hong Kong's corporate governance had taken too long.