The Value of the Corporate Governance Canon on Chinese Companies

Journal of Chinese Governance 4 (2019)

25 Pages Posted: 19 Jan 2018 Last revised: 16 Feb 2020

See all articles by Bryane Michael

Bryane Michael

University of Hong Kong Faculty of Law

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). Journal of Chinese Governance 4 (2019) , Available at SSRN: https://ssrn.com/abstract=3101277 or http://dx.doi.org/10.2139/ssrn.3101277

Bryane Michael (Contact Author)

University of Hong Kong Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

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

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
43
Abstract Views
867
PlumX Metrics