In recent months, South Korea’s stock market has been witnessing a small but innovative experiment. The Korea Corporate Governance Fund, which was established last April, has since August disclosed a part of its shareholdings, in order to meet regulations. Korean regulation requires shareholdings of 5 per cent or more of any listed company to be disclosed.

In its disclosure, the fund claimed that it would enhance corporate value by improving the corporate governance of the companies in which it invests. Initial market response to the disclosure has been phenomenal. Share prices of disclosed stocks surged to their upper price limit for several consecutive days, and rose nearly 50 per cent in the three days after the disclosures were made.