Corporate governance and firm performance

Abstract

This paper analyzes whether good corporate governance leads to better firm performance in China. Throughout, this study uses a dataset of 2856 publicly listed firms from 2003 to 2008 provided by the Chinese Stock Market and Accounting Research (CSMAR). Ownership concentration, CEO duality, board size, percentage of independent directors in board and director’s average educational qualification are used as corporate governance indicators, and ROA, ROE, PE, Tobin’s Q are firm performance indicators. The result shows both ownership concentration and CEO duality are strongly negatively related to firm performance. Board size and percentage of independent board ratio are positively associated with firm performance. Directors’ educational level is moderately positively associated with firm performance.