At the apex of stock market, much importance and approach was given to corporate governance in 1990. Companies tend to overlook corporate governance in a market where the economy is progressing. However, the significance of good governance becomes clearer when the market collapses. Companies having efficient board of directors can start to flourish during difficult times. The stock exchange is the icon of free market where prices are determined solely by of supply and demand and transactions are carried out on arms-length basis. But as the scandal shows, market performance is only as good as the quality of institutions within and outside the market. In this case, the interaction of anachronistic market institutions and political corruption in the context of a liberalized but poorly regulated market produced a crisis of unprecedented scale.
BW Resources Corporation was engaged in a scandal that almost led to the collapse of the local stock market. This scandal is considered as one of the most devastating corporate scandals in the Philippines. This contributed to the weakened private investor confidence and stock market’s image. Best World Gaming and Entertainment Corporation (BWGE) was formed by Dante Tan in early 1998. At the same time, Greater Asia Resources, a leisure and tourism company headed by Eduardo “Moonie” Lim, changed its name to BW Resources. Tan became the major shareholder of BW Resources in 1999 when it acquired the Sheraton Marina Square complex near Manila Bay. Rumors of a merger between BW Resources and BWGE spread. Within a span of a couple of months, PAGCOR announced its intention to operate a casino in Sheraton Marina Square. BW Resources also brought in Stanley Ho, Macau’s casino mogul. The company’s stock price rose from Php2 to Php107 during this time. However, shortly after Ho’s visit to Manila, wherein he faced strong opposition from the Catholic Church and was accused of being a part of the triad gangsters, BW...
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