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EFFECTIVENESS OF CORPORATE GOVERNANCE STRUCTURE: AN ALTERNATIVE METRIC ON THE PERFORMANCE OF LISTED CHINESE COMPANIES

Yuan George Shan, Ron P. McIver

DOI: 10.22495/cbv4i3art4

Abstract

We analyse a panel data set covering the years 2001 to 2005 and comprised of a stratified sample of A, AB and AH non financial companies listed on China’s Shanghai and Shenzhen stock exchanges to provide empirical evidence on the influence of corporate control and governance characteristics on the quality and independence of corporate decision making in these companies. The characteristics considered are the level of concentration in and type of ownership of the companies, particularly high levels of government and foreign ownership, and the composition (expertise) and size of the companies’ two boards. Performance outcomes, and by association the quality and independence of corporate policy decisions, are measured in the form of firm bad debt to accounts receivable ratio (BD/AR). We find that for our sample firms’ concentration of ownership, including state and foreign ownership, and board size and independence are significant factors in determining the levels of the bad debt ratio.

Keywords: China; Corporate Governance; Corporate Control

How to cite this paper: Shan, Y. G., & McIver, R. P. (2008). Effectiveness of corporate governance structure: An alternative metric on the performance of listed Chinese companies. Corporate Board: role, duties and composition, 4(3), 34-43. doi:10.22495/cbv4i3art4

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