Corporate governance reform and firm performance: evidence from China.

Gao, Simon S, Gao, Gordon and Zhang, Tianxi (2009) Corporate governance reform and firm performance: evidence from China. In: Corporate Governance in Less Developed and Emerging Economies (Research in Accounting in Emerging Economies. Emerald Publishing Group, pp. 189-209. ISBN 978-1-84855-252-4

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Purpose – The purpose of this study is to empirically evaluate the effectiveness of China's 2005 shareholding reform and investigate the relationship of the changes of state-owned shareholdings and the largest shareholdings with corporate performance.

Methodology/approach – This study uses a sample of 470 listed firms that were subject to China's 2005 shareholding reform with data from 2004 and 2006. First, we examine whether the reform has reduced state-owned shareholdings measured by ownership concentration and the largest shareholdings through comparing shareholder structures of the reformed listed companies prior to and after the reform. Second, regression analysis was used to explore the relationship between the change of ownership concentration and largest shareholdings and corporate performance of Chinese listed firms.

Findings – This study reveals the effectiveness of the shareholding reform as both ownership concentration and largest shareholdings decrease. This study presents evidence suggesting a positive impact of China's 2005 shareholding reform on corporate performance and endorsing the notion that state-owned shareholdings are detrimental to corporate performance.

Research limitations – ROE is used as a measure of corporate performance, which is influenced by the rules of accounting standards and corporate behavior.

Originality/value – This study provides empirical evidence on the effectiveness of China's shareholding reform and shows a positive relation between the reduction of ownership concentration and corporate performance. This is the first study to examine this relation using the cases of Chinese listed companies. The findings have implications to regulatory bodies, public listed firms and investors in China in terms of corporate governance and shareholding configuration.

Item Type: Book Section
ISBN: 978-1-84855-252-4
Uncontrolled Keywords: Corporate performance; shareholding; China; state-owned; private;
University Divisions/Research Centres: The Business School > School of Accounting, Financial Services and Law
Dewey Decimal Subjects: 600 Technology > 650 Management & public relations > 658 General management
Library of Congress Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Item ID: 4918
Depositing User: Mrs Lyn Gibson
Date Deposited: 25 Jan 2012 09:44
Last Modified: 04 Dec 2013 13:27

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