The Value of the Corporate Governance Canon on Chinese Companies

25 Pages Posted: 19 Jan 2018 Last revised: 6 Feb 2018

Bryane Michael

University of Oxford

Say Hak Goo

The University of Hong Kong - Faculty of Law

Date Written: November 1, 2016

Abstract

China has yet to import the corporate governance “canon” (generally accepted rules as promoting share holder value as well as minority shareholder and other stakeholders’ rights) into its Code of Corporate Governance. What effect would Chinese companies’ simply adopting such a canon -- as defined by Hong Kong or other foreign corporate governance practices -- have on their share prices? We look at Mainland Chinese companies listed in Hong Kong, looking at the way their share prices react to economic fluctuations when they have better or worse corporate governance practices. Using a differences-of-differences methodology, that such share prices could/would increase by around 7% -- increasing profits by about $330 billion. Yet, a significant part of the distribution of these companies loose money in the short-run. These results provide yet another confirmation that adopting the corporate governance canon can profit companies’ investors, but not all of them.

Keywords: Chinese corporate governance, differences-in-differences, post-crisis economics

JEL Classification: G34, N25, M14

Suggested Citation

Michael, Bryane and Goo, Say Hak, The Value of the Corporate Governance Canon on Chinese Companies (November 1, 2016). University of Hong Kong Faculty of Law Research Paper No. 2018/008. Available at SSRN: https://ssrn.com/abstract=3101277 or http://dx.doi.org/10.2139/ssrn.3101277

Bryane Michael (Contact Author)

University of Oxford ( email )

South Parks Road
Oxford, Oxfordshire OX1 3QY
United Kingdom

HOME PAGE: http://users.ox.ac.uk/~scat1663/

Say Hak Goo

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

HOME PAGE: http://hub.hku.hk/rp/rp01248

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