Corporate Governance in China: A Meta‐Analysis

37 Pages Posted: 26 Sep 2018

See all articles by Canan Mutlu

Canan Mutlu

Kennesaw State University - Michael J. Coles College of Business

Marc Van Essen

University of South Carolina - Department of International Business; EMLYON Business School

Mike W. Peng

University of Texas at Dallas - Naveen Jindal School of Management

Sabrina Saleh

University of South Carolina

Patricio Duran

Adolfo Ibanez University

Date Written: September 2018

Abstract

How has the impact of ‘good corporate governance’ principles on firm performance changed over time in China? Amassing a database of 84 studies, 684 effect sizes, and 547,622 firm observations, we explore this important question by conducting a meta‐analysis on the corporate governance literature on China. The weight of evidence demonstrates that two major ‘good corporate governance’ principles advocating board independence and managerial incentives are indeed associated with better firm performance. However, we cannot find strong support for the criticisms against CEO duality. In addition, we go beyond a static perspective (such as certain governance mechanisms are effective or ineffective) by investigating the temporal hypotheses. We reveal that over time, with the improvement in the quality of market institutions and development of financial markets, the monitoring mechanisms of the board and state ownership become more strongly related to firm performance, whereas the incentive mechanisms lose their significance. Overall, our findings advance a dynamic institution‐based view by substantiating the case that institutional transitions matter for the relationship between governance mechanisms and firm performance in the second largest economy in the world.

Keywords: board independence, CEO duality, China, corporate governance, financial market development, institutional change, institution‐based view, managerial incentives, meta‐analysis, state ownership

Suggested Citation

Mutlu, Canan and Van Essen, Marc and Peng, Mike W. and Saleh, Sabrina and Duran, Patricio, Corporate Governance in China: A Meta‐Analysis (September 2018). Journal of Management Studies, Vol. 55, Issue 6, pp. 943-979, 2018, Available at SSRN: https://ssrn.com/abstract=3240855 or http://dx.doi.org/10.1111/joms.12331

Canan Mutlu (Contact Author)

Kennesaw State University - Michael J. Coles College of Business ( email )

1000 Chastain Road
Kennesaw, GA 30144
United States

Marc Van Essen

University of South Carolina - Department of International Business

United States

EMLYON Business School

23 Avenue Guy de Collongue
Ecully, 69132
France

Mike W. Peng

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Sabrina Saleh

University of South Carolina

Patricio Duran

Adolfo Ibanez University ( email )

Diagonal Las Torres 2640 Peñaleón
Presidente Errázuriz 3485 Las Condes
Santiago, 794-1169
Chile

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