Some commentators have also noted the role of disclosure and corporate governance issues in the crisis. In particular, it has been suggested that such issues contributed to the crisis in two ways. Firstly, it has been argued that inadequate disclosure and weak corporate governance allowed significant problems to build up in the financial and corporate sectors of many of the worst-afflicted jurisdictions. International investors and external creditors-due to a lack of due diligence on their part and also to the lack of transparency arising from inadequate disclosure and weak corporate governance on the part of domestic financial institutions and corporations-did not accurately appraise the situation. As a result, apparently questionable commercial decisions were argued to be insulated from market discipline.

Secondly, as the situation in East Asia deteriorated, the inability of international investors and external creditors to differentiate between sound financial institutions and corporations from the distressed ones resulted in the problem of adverse selection. Consequently, creditors became reluctant to role over maturing short-term debt and international investors became reluctant to hold domestic currency-denominated securities for fear of an imminent correction. It is believed that this contributed significantly to the erosion of confidence and in part exacerbated the initial virulence of the East Asian crisis.

At the financial institution level, for example, the World Bank noted that that the lack of transparent and timely balance sheet and other information in most of the East Asian economies led many banks to base credit decisions on the availability of collateral rather than on an analysis of cash flows. This over reliance on collateral resulted in distorted lending decisions by domestic and foreign financial institutions and increased the vulnerability of their respective portfolios to downturns in the region's asset markets.

At the corporate level, the World Bank noted that the ownership structure of public listed companies in certain jurisdictions were typically owner-managed. It has been argued that such ownership structures do not readily promote the appropriate incentives for strong corporate governance and despite recent improvements in disclosure and other requirements there was perceived to be inadequate protection for minority shareholders. The World Bank report also highlighted that poor corporate governance was also evident in the lack of impartial audit committees and of independent directors in some of the East Asian corporations. The absence of such oversight resulted in a lapse of discipline in corporate behaviour.

In at least one jurisdiction, it was reported that the rapid growth and the massive size of some of the largest corporations resulted in them being viewed as "too big to fail" and thus encouraged excessive risk-taking on the part of those corporations. In addition, it was argued that the non-transparent system of interrelated ownership of this jurisdiction were exploited by majority shareholders to conduct favourable transfer pricing between its subsidiaries in order to cross-subsidise money-losing units within the group and also to provide implicit and explicit guarantees for bank loans. The extensive system of cross-guarantees also made it difficult for outsiders (like minority) shareholders, in particular, and the market, in general, to disentangle their respective exposures to ensure appropriate valuation of collateral offered as security for loans and the allocation of losses. This is believed to have contributed further to the erosion of investor confidence when the situation begin to deteriorate.