Report on the HKIoD Corporate Governance Scorecard 2020

This report presents the findings of a comprehensive study on corporate governance practices of Hong Kong listed companies. This “Corporate Governance Scorecard” project assesses the quality of corporate governance practices of locally listed companies on a regular basis. This study was commissioned by The Hong Kong Institute of Directors (HKIoD) and was executed by the Centre for Corporate Governance and Financial Policy (CCGFP) at Hong Kong Baptist University. The companies surveyed were constituent stocks of four major indices. The evaluation criteria were based on international standards (OECD Principles of Corporate Governance) and the Hong Kong Exchanges and Clearing Limited’s Code of Corporate Governance Practices and Recommended Best Practice for Corporate Directors. The project aims to assist Hong Kong companies, policy makers and the public to identify ways to improve corporate governance practices. This survey was based on researching company data in the public domain for the financial year 2018. To respond to the latest developments in corporate governance requirements,the questionnaire of the 2020 scorecard has incorporated some new areas of assessment. Our findings show that most companies have shown improvements in the basic corporate governance standards over the past 3years. Importantly, we find that companies with improved corporate governance standards experienced smaller declines in market valuation compared to companies with no improvement in corporate governance standards when the market was down. However, corporate governance is a dynamic process, with new best practices continuously emerging. Many companies are still lagging in the implementation of the latest trends.