Corporate Governance in China: A Meta-Analysis

Canan C. Mutlu, Marc van Essen, Mike W. Peng, Sabrina F. Saleh and Patricio Duran
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Canan C. Mutlu: KSU - Kennesaw State University
Marc van Essen: University of South Carolina [Columbia], EM - EMLyon Business School
Mike W. Peng: UT Dallas - University of Texas at Dallas [Richardson]
Sabrina F. Saleh: USC Upstate - University of South Carolina Upstate
Patricio Duran: Universidad Adolfo Ibáñez [Santiago]

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Abstract: How has the impact of ‘good corporate governance' principles on firm performance changed over time in China? Amassing a database of 84 studies, 684 effect sizes, and 547,622 firm observations, we explore this important question by conducting a meta-analysis on the corporate governance literature in China. The weight of evidence demonstrates that two major ‘good corporate governance' principles advocating board independence and managerial incentives are indeed associated with better firm performance. However, we cannot find strong support for the criticisms against CEO duality. In addition, we go beyond a static perspective (such as certain governance mechanisms are effective or ineffective) by investigating the temporal hypotheses. We reveal that over time, with the improvement in the quality of market institutions and development of financial markets, the monitoring mechanisms of the board and state ownership become more strongly related to firm performance, whereas the incentive mechanisms lose their significance. Overall, our findings advance a dynamic institution-based view by substantiating the case that institutional transitions matter for the relationship between governance mechanisms and firm performance in the second largest economy in the world.

Keywords: meta-analysis; state ownership; board independence; CEO duality; China; Corporate Governance; financial market development; institutional change; institution-based view; managerial incentives (search for similar items in EconPapers)
Date: 2018-09-01
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Citations: View citations in EconPapers (26)

Published in Journal of Management Studies, 2018, 55 (6), 943-979 p. ⟨10.1111/joms.12331⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02312124

DOI: 10.1111/joms.12331

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