Does corporate governance matter in China?

Stephen Y L Cheung*, Ping JIANG, Piman LIMPAPHAYOM, Tong LU

*Corresponding author for this work

Research output: Contribution to journalJournal articlepeer-review

73 Citations (Scopus)


This study assesses the quality of corporate governance practices of Chinese listed companies in 2004. Based on the Revised OECD Principles of Corporate Governance [OECD, 2004. Principles of Corporate Governance, Organization of Economic Cooperation and Development.], we develop a corporate governance index (CGI) to measure the overall quality of corporate governance and disclosure practices of the 100 largest Chinese listed firms. The results show that some Chinese companies have been making progress in corporate governance reform. Specifically, there is a significant difference in the CGI of the top versus the bottom performing companies. Further, oversea-listed Chinese companies tend to show more regard for the role of stakeholders and disclosure and transparency than non-oversea-listed Chinese companies. However, further tests show that there is no statistically significant relation between the quality of corporate governance practices, as measured by the CGI, and market valuation among firms in the sample. It appears that, in 2004, the benefits of good corporate governance have not been fully incorporated into the market valuation of these Chinese companies.

Original languageEnglish
Pages (from-to)460-479
Number of pages20
JournalChina Economic Review
Issue number3
Publication statusPublished - Sept 2008

Scopus Subject Areas

  • Finance
  • Economics and Econometrics

User-Defined Keywords

  • China
  • Corporate governance


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