Internal governance mechanisms and firm performance in China

Hu, Helen Wei; Tam, On Kit; Tan, Mengxi

doi:10.1007/s10490-009-9135-6

Cited by 186 publications

(182 citation statements)

References 54 publications

(73 reference statements)

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“…The results imply that adding more directors to the board will decrease the financial performance of the firm, suggesting that a large board may not necessarily increase the value to the company. This is supported by previous studies by [27,29,49,51]. Boubaker et al found that large boards result in a loss of productivity and losses are mainly due to increased difficulties in coordinating the efforts of multiple individuals, which also results in slower decision-making and more free riding [52].…”

Section: Random Effects Model: Board Size and Firm Performance (Roe)supporting

confidence: 67%

Effect of Corporate Governance Structure on the Financial Performance of Johannesburg Stock Exchange (JSE)-Listed Mining Firms

Dzingai

Fakoya

2017

Sustainability

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There have been many corporate collapses and financial crises in recent years linked to a lack of effective corporate governance. The South African King IV Code of Corporate Governance recommends that corporate governing bodies should be comprised of an appropriate balance of knowledge, diversity, and independence for discharging their duties objectively and more efficiently. This study examines the effect of corporate governance structures on firm financial performance. The secondary data of selected Johannesburg Stock Exchange (JSE), Socially Responsible Investment (SRI) Index-listed mining firms' sustainability reports, and integrated annual financial statements are used. Using panel data analysis of the random effects model, we determined the relationship between board independence and board size and the return on equity (ROE) for the period 2010-2015. Results indicate a weak negative correlation between ROE and board size, and a weak, but positive, correlation between ROE and board independence. Additionally, there is a positive, but weak, correlation between ROE and sales growth, but a negative and weak relationship between ROE and firm size. The study suggests that effective corporate governance through a small effective board and monitoring by an independent board result in increased firm financial performance. We recommend that South African companies see compliance with the recommendations of the King IV Code on Corporate Governance not as a liability, but an ethical investment that may likely yield financial benefit in the long-term. Although complying with corporate governance principles does not necessarily translate into a significant economic benefit, firms should, however, continue to adopt corporate governance for ethical reasons to meet stakeholder's social and environmental needs for sustainable development.

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Section: Random Effects Model: Board Size and Firm Performance (Roe)supporting

confidence: 67%

Effect of Corporate Governance Structure on the Financial Performance of Johannesburg Stock Exchange (JSE)-Listed Mining Firms

Dzingai

Fakoya

2017

Sustainability

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“…The listed firms in China showed a correlation between corporate governance and the firms' performance, where the estimated coefficient values are 0.3057 and 0.4575 for Tobin's Q model and ROA model, respectively. This is consistent with the previous results of Hu et al (2010), Sami et al (2011), Estrin andPrevezer (2011), and Masulis et al (2012). Lastly, there is also a positive and significant contribution by corporate governance to firm performance in Indonesia.…”

Section: The Role Of Corporate Governancesupporting

confidence: 92%

Training and Development Policy, Corporate Governance, and Firm Performance

2018

GADJAH MADA INT. J. BUS.

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This research investigates the role of corporate governance as a moderator between firms' performance and their Training and Development Policy (TDP). Research data were taken from the US, Brazil, Russia, India, China and Indonesia from 2007 to 2013. This research found that the TDP is important for enhancing firm performance. Also, the role of the training and development policy impacted each firm's performance differently, according to the level of corporate governance of that firm. The moderating effect of corporate governance reveals that better governance of a firm may have an influence on its TDP policy, which would lead to better firm performance. Overall, the results are consistent with the conjecture that corporate governance influences the firm's performance and training and development policy, suggesting that the training and development policy's success depends on the corporate governance level of the firm. Hence, this research contributes to two big theories: the knowledge transfer theory and the human capital theory, where the research findings show a confirmation of the two theories application in this research context.

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“…Similar to the perceptions about the boards of directors, most people perceive the supervisory boards to be ineffective in corporate governance because of the strong influence of controlling shareholders (Dahya, Karbhari, Xiao, & Yang, 2003;Shan, 2013;Xiao et al, 2004). Empirical evidence is consistent with this perception, showing that supervisory boards are not significantly associated with executive compensation Conyon & He, 2012), firm performance (Buck et al, 2008;Gang, 2007;Hu et al, 2010), expropriation (Shan, 2013), or firm decisions such as auditor switching and corporate social responsibility (Jia & Zhang, 2011;Lin & Liu, 2009). Thus, like the boards of directors, the supervisory boards have not yet become an effective internal corporate governance mechanism.…”

Section: Internal Mechanism: Boards Of Directorsmentioning

confidence: 87%

Empirical Research on Corporate Governance in China: A Review and New Directions for the Future

2015

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The ownership structure of Chinese firms has experienced significant changes over the last three decades, including the development of a fast growing stock market through which a large number of domestic firms have become publicly traded corporations. These changes have drawn increasing attention from researchers of corporate governance. In this article, we review the empirical research on corporate governance in China, with a focus on the internal and external governance mechanisms that have been investigated and the findings about the effectiveness of these mechanisms. On the basis of our review of 132 studies, we summarize the major findings and discuss the limitation of agency theory in understanding the governance issue in Chinese firms. We offer several ideas (e.g., the importance of the social context, new conceptualization of governance, different outcomes of governance, and data/method issues) for a new agenda to guide future research in the corporate governance of firms operating in the Chinese and other emerging economy contexts.

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Internal governance mechanisms and firm performance in China

Abstract: Internal governance mechanisms, Ownership concentration, Controlling shareholder, Board of directors, Supervisory board,

Cited by 186 publications

References 54 publications

Effect of Corporate Governance Structure on the Financial Performance of Johannesburg Stock Exchange (JSE)-Listed Mining Firms

Effect of Corporate Governance Structure on the Financial Performance of Johannesburg Stock Exchange (JSE)-Listed Mining Firms

Training and Development Policy, Corporate Governance, and Firm Performance

Empirical Research on Corporate Governance in China: A Review and New Directions for the Future

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