Does Corporate Governance Predict Future Performance? Evidence from Hong Kong

Stephen Y L CHEUNG*, J. Thomas Connelly, Ping Jiang, Piman Limpaphayom

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

39 Citations (Scopus)

Abstract

This study uses time-series data to examine the relation between changes in the quality of corporate governance practices and subsequent market valuation among large listed companies in Hong Kong. The results indicate that firms that exhibit improvements in the quality of corporate governance display a subsequent increase in market valuation, whereas firms that exhibit deterioration in the quality of corporate governance practices tend to encounter a decline in market valuation. Additionally, the impact is greater for firms that are included in the MSCI index or with a China affiliation. The results provide evidence in support of the notion that good corporate governance can predict future market valuation.

Original languageEnglish
Pages (from-to)159-197
Number of pages39
JournalFinancial Management
Volume40
Issue number1
DOIs
Publication statusPublished - Mar 2011

Scopus Subject Areas

  • Accounting
  • Finance
  • Economics and Econometrics

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