Company directors who think corporate governance is just a fad are kidding themselves, according to a new report.

The global report, released by Institutional Shareholder Services, covers interviews with more than 300 institutional investors representing trillions of assets across 19 countries.

And the findings are sobering. Company directors right around the world have been put on notice to start disclosing more financial information, to clean up their boards and to start paying chief executive officers in a way that rewards performance, according to the 2006 ISS Global Institutional Investor Study.

More than seven out of 10 investors said they wanted to see improvements in disclosure, hedge funds have been identified as an emerging force and China is shaping up as the next hot spot in corporate governance. According to the study, 93 per cent of investors in China said corporate governance will become more important over the next three years. It also revealed that 71 per cent of investors globally said corporate governance had become important to their firms over the past three years and 63 per cent forecast increased focus on it over the next three. And with more investors casting proxy votes outside their home markets, it's a trend companies the world over can't ignore.