Transplanting Audit Committees to Korean Soil:
A Window into the Rapid Evolution of Korean Corporate Governance

One of the most notable changes in Korea’s corporate governance in the post-crisis era is the rise of outside directors and audit committees. Audit committees were introduced primarily under pressure from international institutions, such as the IMF and IBRD. As introducing a foreign institution like the audit committee under outside pressure was a humiliating experience, it was natural that local corporate law specialists, as well as the business community, were generally opposed to its implementation. Hostility toward the audit committee now seems substantially moderated, at least in the business community. A number of listed firms now have an audit committee, although they are not statutorily required.

Despite the rapid spread of the audit committee, as to its role or function, substantial misunderstanding and confusion persist even among experts. Audit committee practice seems not yet well established. Even some of the basic issues are still in dispute. In other words, the process of convergence has started, but is not yet complete.