Did corporate governance safeguard investor interest in the global financial crisis? Evidence from Hong Kong SAR

Man Ching, Gladie LUI, Lai Sheung, Suwina CHENG, Connie SHUM

Research output: Journal PublicationsJournal Article (refereed)

2 Citations (Scopus)

Abstract

The global financial crisis of 2008 aroused renewed interest in the effectiveness of corporate governance mechanisms to safeguard investor interests. In this paper, we measure the effects of the crisis from 2008 to 2009 on the share performance of 976 companies listed on the Hong Kong Stock Exchange in the Hong Kong SAR and examine the link between share performance and corporate governance mechanisms. Our results present evidence that firms with a higher proportion of independent directors and a greater concentration of ownership had lower share performance, but lower price volatility, during the global financial crisis. These results suggest that no single corporate governance mechanism is fit for all economic environments and time frames. To strengthen investors' confidence, companies should enhance the efficiency and adaptability of their governance mechanisms in turbulent times.
Original languageEnglish
Pages (from-to)534-550
Number of pages17
JournalAsia Pacific Business Review
Volume21
Issue number4
Early online date16 Apr 2015
DOIs
Publication statusPublished - 2015

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Keywords

  • Asia-Pacific
  • China
  • board of directors
  • corporate governance
  • financial crisis
  • Hong Kong SAR
  • market performance
  • ownership structure
  • PRC

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