Corporate Governance in China: A Step Forward

30 Pages Posted: 28 Dec 2009

See all articles by Yan-Leung Cheung

Yan-Leung Cheung

The Education University of Hong Kong

Ping Jiang

City University of Hong Kong (CityU)

Piman Limpaphayom

Sasin GIBA of Chulalongkorn University

Tong Lu

Chinese Academy of Social Sciences (CASS)

Abstract

Recently, the presumed benefits of corporate governance have become one of the most contentious issues especially for emerging markets in Asia where institutional settings are quite different from other parts of the world. Using an internationally accepted benchmark (OECD's Principles of Corporate Governance, OECD, 2004), this study evaluates the progress of corporate governance practice of Chinese listed companies. A corporate governance index (CGI) is constructed to measure the quality of corporate governance practices of the 100 largest listed firms in China during 2004-2006. The results show that Chinese companies have been making progress in the corporate governance reform. The findings also show a positive relation between market valuation and overall corporate governance practices, as measured by the CGI, among these Chinese listed companies. Additional investigation reveals that the rights of shareholders are the main driver in the relationship.

Suggested Citation

Cheung, Yan-Leung and Jiang, Ping and Limpaphayom, Piman and Lu, Tong, Corporate Governance in China: A Step Forward. European Financial Management, Vol. 16, Issue 1, pp. 94-123, January 2010, Available at SSRN: https://ssrn.com/abstract=1527931 or http://dx.doi.org/10.1111/j.1468-036X.2008.00446.x

Yan-Leung Cheung (Contact Author)

The Education University of Hong Kong ( email )

Department of Social Sciences
10 Lo Ping Road, Tai Po, New Territories
Hong Kong
Hong Kong

Ping Jiang

City University of Hong Kong (CityU) ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

Piman Limpaphayom

Sasin GIBA of Chulalongkorn University ( email )

Chula 12, Phyathai Road
Bangkok, 10330
Thailand
662 2184058 (Phone)
662 2153797 (Fax)

Tong Lu

Chinese Academy of Social Sciences (CASS) ( email )

Beijing, 100732
China

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