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Does corporate governance matter in competitive industries? Evidence from China

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  • Yu, Zhuangxiong
  • Li, Jie
  • Yang, Jian

Abstract

Using the data of Chinese listed firms from 2003 to 2013, this study examines how product market competition affects the impact of corporate governance on firm value. In sharp contrast with the overwhelming empirical evidence based on the US and European developed markets that product market competition acts as a substitute for corporate governance and good governance matters only in non-competitive industries, we document that good governance of Chinese firms significantly increases firm value only in competitive industries, primarily through less empire building. The evidence is significant particularly after the recent global financial crisis and far stronger for state-owned firms than for non-state-owned firms.

Suggested Citation

  • Yu, Zhuangxiong & Li, Jie & Yang, Jian, 2017. "Does corporate governance matter in competitive industries? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 43(C), pages 238-255.
    • Handle: RePEc:eee:pacfin:v:43:y:2017:i:c:p:238-255
    DOI: 10.1016/j.pacfin.2017.04.008
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    Cited by:

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    3. Sadaf Ali & Ajid ur Rehman & Muhammad Jawad & Munazza Naz, 2024. "Product market competition and investment efficiency nexus with mediating effect of firm risk-taking in Pakistan," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 21(3), pages 488-499, September.
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    5. Fareed, Zeeshan & Wang, Nianyong & Shahzad, Farrukh & Meran Shah, Syed Ghulam & Iqbal, Najaf & Zulfiqar, Bushra, 2022. "Does good board governance reduce idiosyncratic risk in emerging markets? Evidence from China," Journal of Multinational Financial Management, Elsevier, vol. 65(C).
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    More about this item

    Keywords

    Product market competition; Corporate governance; Firm value; Emerging markets;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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