Asia Pacific Journal of Management

, Volume 27, Issue 4, pp 727–749

Internal governance mechanisms and firm performance in China

Article

DOI: 10.1007/s10490-009-9135-6

Cite this article as:
Hu, H.W., Tam, O.K. & Tan, M.G. Asia Pac J Manag (2010) 27: 727. doi:10.1007/s10490-009-9135-6

Abstract

Corporate governance issues arising from concentrated ownership structure in emerging economies have received growing attention. Adopting a principal–principal perspective, this paper employs structural equation modeling to evaluate the independent and interdependent effects of internal governance mechanisms in enhancing firms’ value in China. Based on a 3-year dataset covering 304 publicly listed companies over 2003–2005, our findings suggest that ownership concentration has the most significant governance effect and has impacted negatively on firm performance. Furthermore, the governance role of the board of directors and supervisory boards is found to have been hindered by ownership concentration, rendering them unable to improve firm performance at present.

Keywords

Internal governance mechanismsOwnership concentrationControlling shareholderBoard of directorsSupervisory board

Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  • Helen Wei Hu
    • 1
  • On Kit Tam
    • 2
  • Monica Guo-Sze Tan
    • 3
  1. 1.Department of Management and MarketingUniversity of MelbourneMelbourneAustralia
  2. 2.RMIT UniversityMelbourneAustralia
  3. 3.Deloitte Touch TohmatsuMelbourneAustralia