Directors’ interests, family control and firm performance: Evidence from Hong Kong listed firms

Wong, Ben; Wong, Raymond; Ko, Annie; Kwong, Raymond

Abstract

Impact of the 2005 revision of corporate governance (CG) guidelines
on firm performance in Hong Kong is examined through multiple regression models. A comprehensive corporate governance index (CGI) is used for measuring performance in the post-2005 period. Findings suggest CGI has a significantly positive relationship with firm performance. Family ownership (<=23%) or directors’ interests (<=18.4%) also have a significantly positive relationship with firm performance. High proportion of outside directors on the
board and larger boards also impact performance significantly. Family control has a stronger impact on performance in case of younger firms. Also, when family members draw relatively smaller salaries that too affects performance significantly. Most Hong Kong listed companies are family controlled and need to improve their governance to earn confidence of overseas investors. Besides, international investors and regulators can refer to results of sample firms which have ADRs listed in the USA.

• Journal Article Type: Article
• Online Publication Date: Nov 15, 2022
• Publication Date: 2022
• Deposit Date: Mar 20, 2025
• Print ISSN: 1751-6447
• Electronic ISSN: 1751-6455
• Publisher: Inderscience
• Peer Reviewed: Peer Reviewed
• Volume: 12
• Issue: 5
• Pages: 551-573
• Keywords: Corporate governance; corporate governance index; CGI; family control; directors’ interests; firm performance; Hong Kong.
• Public URL: https://uwe-repository.worktribe.com/output/13967609