Does Corporate Governance Predict Future Performance? Evidence from Hong Kong |
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| Authors: | Yan‐Leung Cheung J Thomas Connelly Ping Jiang Piman Limpaphayom |
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| Institution: | 1. Yan‐Leung Cheung is a Chair Professor in the School of Business at Hong Kong Baptist University, Kowloon, Hong Kong.;2. J. Thomas Connelly is an Assistant Professor in the Department of Banking and Finance at Chulalongkorn University, Bangkok, Thailand.;3. Ping Jiang is an Associate Professor at the School of International Trade and Economics at the University of International Business and Economics, Beijing, China.;4. Piman Limpaphayom is the Finance Department Head at Sasin Graduate Institute of Business Administration of Chulalongkorn University, Bangkok, Thailand. |
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| Abstract: | This study uses time‐series data to examine the relation between changes in the quality of corporate governance practices and subsequent market valuation among large listed companies in Hong Kong. The results indicate that firms that exhibit improvements in the quality of corporate governance display a subsequent increase in market valuation, whereas firms that exhibit deterioration in the quality of corporate governance practices tend to encounter a decline in market valuation. Additionally, the impact is greater for firms that are included in the MSCI index or with a China affiliation. The results provide evidence in support of the notion that good corporate governance can predict future market valuation. |
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