Title

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

Document Type

Journal article

Source Publication

Asia Pacific Business Review

Publication Date

2015

Volume

21

Issue

4

First Page

534

Last Page

550

Keywords

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

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.

DOI

10.1080/13602381.2015.1030253

Print ISSN

13602381

E-ISSN

1743792X

Publisher Statement

Copyright © 2015 Taylor & Francis.

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Recommended Citation

Cheng, S., Lui, G., & Shum, C. (2015). Did corporate governance safeguard investor interest in the global financial crisis? Evidence from Hong Kong SAR. Asia Pacific Business Review, 21(4), 534-550. doi: 10.1080/13602381.2015.1030253