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Corporate governance mechanisms and financial performance in China: panel data evidence on listed non financial companies

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  • Yuan George Shan
  • Ron P. McIver

Abstract

The objective of this paper is to provide empirical evidence on the influence of corporate governance characteristics and corporate ownership concentrations on the financial performance of Chinese companies. This is based on analysis of a panel data set covering the years 2001 to 2005. The characteristics considered are the ratios of independent directors and professional supervisors on the companies' two boards, and the level of concentration in and type of ownership of the companies. Our chosen performance metric is Tobin's Q . We find that ownership concentration in general is a significant factor in determining firm performance. The degree of board independence is significant, but it only appears to have a positive impact on performance in larger companies. The expertise of the supervisory board is not a significant determinant of corporate financial performance in China. Our findings support a continued focus on making improvements to the operation and effectiveness of China's institutions of corporate governance.

Suggested Citation

  • Yuan George Shan & Ron P. McIver, 2011. "Corporate governance mechanisms and financial performance in China: panel data evidence on listed non financial companies," Asia Pacific Business Review, Taylor & Francis Journals, vol. 17(3), pages 301-324, July.
    • Handle: RePEc:taf:apbizr:v:17:y:2011:i:3:p:301-324
    DOI: 10.1080/13602380903522325
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    References listed on IDEAS

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    1. Lihui Tian, 2001. "Government Shareholding and the Value of China's Modern Firms," William Davidson Institute Working Papers Series 395, William Davidson Institute at the University of Michigan.
    2. Cindy A. Schipani & Liu Junhai, 2001. "Corporate Governance in China: Then and Now," William Davidson Institute Working Papers Series 407, William Davidson Institute at the University of Michigan.
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