Corporate Governance on Company Performance in Hong Kong

This dissertation proposal evaluates the impact of corporate governance on company performance in Hong Kong. The literature review highlights the key areas of analysis, and the methodology outlines the data collection and analysis plan. The study aims to evaluate the extent of development of corporate governance procedures and identify the relationship between corporate governance practices and organizational performance in Hong Kong.

Running head: CORPORATE GOVERNANCE ON COMPANY PERFORMANCE IN HONG
KONG
Assignment Cover Sheet
Student Number 1623429
Unit code KAP015-3 Assignment No. 2 (Referral)
Unit Title Advances in Accounting [Hong Kong]
Unit Coordinator Dr. Mohamed Saeudy
Due Date
10th August
2018

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CORPORATE GOVERNANCE ON COMPANY PERFORMANCE IN HONG KONG

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CORPORATE GOVERNANCE ON COMPANY PERFORMANCE IN HONG KONG
Executive Summary
This dissertation proposal has been constructed in order to have an idea about the performance of
the companies with respect to corporate governance. It is seen that introduction of the proposal
has been constructed in order to have an idea about corporate governance. The background of the
paper has provided an idea about the companies that are operational in the country and how their
operational activities have been improved with the help of corporate governance. The literature
has provided an idea about the elements and the aspects in accordance to the topic with the help
of which the dissertation in relation to the topic would be undertaken. The researcher would be
making use of secondary data and therefore qualitative analysis would be done in order to come
to the outcome of the paper.

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CORPORATE GOVERNANCE ON COMPANY PERFORMANCE IN HONG KONG
Table of Contents
Introduction......................................................................................................................................4
Background of the Study.............................................................................................................5
Rationale of the Study.................................................................................................................5
Research Aims and Objectives....................................................................................................5
Research Question.......................................................................................................................6
Literature Review............................................................................................................................7
Arguments for and against the proposal......................................................................................8
Research Methodology....................................................................................................................9
Data Analysis Plan.......................................................................................................................9
Limitations...................................................................................................................................9
Time Scale.................................................................................................................................10
Conclusion.....................................................................................................................................11
Reference list.................................................................................................................................12

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CORPORATE GOVERNANCE ON COMPANY PERFORMANCE IN HONG KONG
Introduction
In the current time period due to the consequence of certain governance issues that is
taking place, corporate governance has become essential and have re-developed as one of the
most key topics of the business (Low, Robertsand Whiting 2015). There have been several
debates and therefore evaluations have been made for many years in the global economy.
Cheng, Lui and Shum(2015) explained that in the market driven economies like in the
countries like USA and UK, it is seen that privatization, free movement of the capital and
regulation of the market has been enhancing the culture towards equity investment all over the
globe. However, it is seen that rise in the frequency and the sternness of the corporate issues
have become invaluable and this makes the companies move towards the limelight. It has been
able to draw attention due to the faults within the governance can have significant amount of
impact on a very large number of stakeholders who are inclusive of pensioners, clients, suppliers,
employees, shareholders etc (Leung, Richardson and Jaggi 2014). It is even seen that the errors
within the governance may lead to various kinds of managerial issues that may be inclusive of
insolvency, reputational damage and bankruptcy (Lo and Kwan 2017). There have been certain
adverse and several issues that have taken place in the recent years that had an impact on various
companies like Enron, Kirch Media, Andersen etc and this has signified that small issues related
to governance that become larger problems if they are ignored. Hence, the issues related to
corporate governance needs to be resolved as fast as possible or else any kind of ignorance and
postponements can have adverse impact on the goodwill of an organization and shareholder
value in the market (Ortas et al. 2015).

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CORPORATE GOVERNANCE ON COMPANY PERFORMANCE IN HONG KONG
Background of the Study
The corporate governance practises that are seen in the companies that are operational in
Hong Kong has been evaluated with the help of various kinds of research papers and models. It
is known that most of the companies that are operational in Hong Kong are managed by the
stakeholders related to the organizations. Pratheepkanth, Hettihewa and Wright (2016) have cited
that a large number of companies are family based businesses and therefore they have been
maintaining internal governance in order to maintain effective operational activities. The
businesses in Hong Kong are a combination of ownership and control and therefore the
companies have their own ownership model that is useful for the increase in the level of
profitability (Ayuso et al. 2014). Hence, it is seen that corporate governance of the companies
has an influential role in the development of the performance of the companies in Hong Kong.
This research would therefore look to assess the same and discover effective results.
Rationale of the Study
The development of the global economy has showcased the rise in the popularity of
corporate governance and this has been mainly due to the rise in the efficiency level of the
companies in accordance to their performance (Siddiqui 2015). Corporate governance is helpful
in the development of the external and internal relationships among the stakeholders of the
companies and therefore assessment on this topic would lead to the generation of new and
improved ideas and results (Usman, Akhter and Akhtar 2015).
Research Aims and Objectives
The aims and objectives of the research are given as follows:
 Evaluate the extent of development of the corporate governance procedure with respect to
the working environment of Hong Kong.

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CORPORATE GOVERNANCE ON COMPANY PERFORMANCE IN HONG KONG
 Ascertain the relationship among the practices of corporate governance and the
organizational performance in Hong Kong.
 Identify the concepts and the theories that are related to corporate governance and the
extent to which the companies in Hong Kong accept with the same.
Research Question
The questions that would be determined in accordance to this topic has been given as
follows:
Q1. What is the level of significance of the corporate governance framework to the development
of the performance of the organizations operational in Hong Kong?
Q2. How can an efficient corporate government policy useful in the order to reach the optimal
operational performance of the companies in Hong Kong?

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CORPORATE GOVERNANCE ON COMPANY PERFORMANCE IN HONG KONG
Literature Review
The review of literature is useful for creating an idea about the recommendations and the
suggestions that have been provided by other researchers (Bazrafshan, Kandelousi and Hooy
2016).
There are several approaches that are available for use but it is seen that incorporation of
the approach would be on the basis of their strength and weakness (Fung 2014). It is seen that
corporate governance brings about the development in the operational activities however, the
process that would be used by the management for the incorporation of the same would
determine its effectiveness. Al-Janadi, Abdul Rahman and Alazzani (2016) explained that there
have been lots of debates that have been taking place with respect to the strengths and
weaknesses and the most of the studies have found that strengths of corporate governance
approaches are higher than their weaknesses. It is simply due to the fact that corporate
governance is helpful in the development of the profitability and the performance of the
companies. In the same manner, corporate governance is even helpful in improving the
motivation of the employees, which in turn would improve the operational activities as well (Ko
et al. 2016).
In a summary it can be ascertained that corporate governance is helpful in the
development of the performance of the companies as most of the researches that have been
evaluated agrees to the same (Ntim et al. 2017).
Iraya, Mwangi and Muchoki (2015) explained that families and individuals, financial
companies and institutions may have various kinds of objectives, skills of monitoring and
various kinds of assessment incentives.

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CORPORATE GOVERNANCE ON COMPANY PERFORMANCE IN HONG KONG
Wong (2016) assessed the role of the various corporate governance processes and thereby
provides proof in relation to the interdependence among these processes. It can therefore ben
concluded that one of the processes is looked upon to be effective in one place may not be
related positively to the performance of the companies elsewhere (Fan, Wong and Zhang 2014).
Arguments for and against the proposal
There are several researchers like Lins, Servaes and Tamayo, (2017), who have supported
the fact that the dispersal of ownership within an organization has a positive effect on the
attainment of the goal of profit maximisation of the companies as a segregation of control,
especially at the moment when the CEO does not wish to act as the Chairperson simultaneously,
which may develop the managers to act according to their own interests (Singh et al. 2018).
Michael and Goo (2015) explained that ineffective performance will have a negative impact on
them whereas they would not be rewarded properly for effective corporate governance. The
intended finding of the research has been that corporate governance is helpful in the development
of the performance of a company and therefore can be concluded that incorporation of corporate
governance becomes essential (Abdallah and Ismail 2017). The degree of consistency with
respect to the previous researches have been positive and direct and therefore the earlier
researches are helpful for this current proposal.

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CORPORATE GOVERNANCE ON COMPANY PERFORMANCE IN HONG KONG
Research Methodology
The researcher in accordance to this topic would be undertaking qualitative methodology
in order to have an understanding of the effect of corporate governance on the performance of
the companies in Hong Kong. The researcher would be selecting positivism philosophy as a
positive explanation would be made with the help of which outcome in accordance to this topic
would be attained (Nguyen, Locke and Reddy 2015).
The researcher in accordance to this topic has selected deductive approach due to the fact
that secondary data would be used for the purpose of evaluation and hence, the models and the
theories that have been utilised earlier by other researchers would be used with the help of which
results in accordance to this topic would be ascertained (Pucheta‐Martínez, Bel‐Oms and Olcina‐
Sempere 2016).
Descriptive research design will be selected by the researcher simply due to the fact that
the data that would be collected would undergo extensive explanation with the help of which the
result in accordance to the topic could be attained (Tang et al. 2015).
Data Analysis Plan
It is seen that secondary data would be collected with the help of various journals and
articles with the help of which the development of company performance in accordance to
corporate governance in Hong Kong would be known (Dias, Rodrigues and Craig 2017).
Limitations
The limitations with regards to the paper has been the time horizon and the accessibility
of the data. The availability of time would have provided better data with respect to which the
proposal could have been constructed in a more effective manner.

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CORPORATE GOVERNANCE ON COMPANY PERFORMANCE IN HONG KONG
Time Scale
Task Week
1
Week
2
Week
3
Week
4
Week
5
Week
6
Week
7
Week
8
Week
9
Selection of topic
and search for
justification
Constructing
literature
Selecting
appropriate
methods
Data collection
Data analysis and
representation
Reviewing the
outcomes
Conclusions and
recommendations
Submitting draft of
the project
Printing and final
submission

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CORPORATE GOVERNANCE ON COMPANY PERFORMANCE IN HONG KONG
Conclusion
The proposal that has been constructed has the intention of gaining proper understanding
of the corporate governance in the development of the company performance in Hong Kong. The
background of the paper has provided how companies in Hong Kong have incorporated
corporate governance and how this has impacted their overall performance. The literature review
has highlighted the key specific areas in regards to which analysis on this topic would be
ascertained and understanding of the same would be attained. The methodology has determined
the kind of data that would be taken into consideration with the help of which evaluation process
is possible.

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CORPORATE GOVERNANCE ON COMPANY PERFORMANCE IN HONG KONG
Reference list
Abdallah, A.A.N. and Ismail, A.K., 2017. Corporate governance practices, ownership structure,
and corporate performance in the GCC countries. Journal of International Financial Markets,
Institutions and Money, 46, pp.98-115.
Al-Janadi, Y., Abdul Rahman, R. and Alazzani, A., 2016. Does government ownership affect
corporate governance and corporate disclosure? Evidence from Saudi Arabia. Managerial
Auditing Journal, 31(8/9), pp.871-890.
Ayuso, S., Rodríguez, M.A., García-Castro, R. and Ariño, M.A., 2014. Maximizing
stakeholders’ interests: An empirical analysis of the stakeholder approach to corporate
governance. Business & society, 53(3), pp.414-439.
Bazrafshan, E., Kandelousi, A.S. and Hooy, C.W., 2016. The impact of earnings management on
the extent of disclosure and true financial performance: Evidence from listed firms in Hong
Kong. The British Accounting Review, 48(2), pp.206-219.
Cheng, S., Lui, G. and 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),
pp.534-550.
Dias, A., Rodrigues, L.L. and Craig, R., 2017. Corporate governance effects on social
responsibility disclosures. Australasian Accounting Business and Finance Journal, 11(2).
Fan, J.P., Wong, T.J. and Zhang, T., 2014. Politically Connected CEOs, Corporate Governance,
and the Post‐IPO Performance of China's Partially Privatized Firms. Journal of Applied
Corporate Finance, 26(3), pp.85-95.

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CORPORATE GOVERNANCE ON COMPANY PERFORMANCE IN HONG KONG
Fung, B., 2014. The demand and need for transparency and disclosure in corporate
governance. Universal Journal of Management, 2(2), pp.72-80.
Iraya, C., Mwangi, M. and Muchoki, G.W., 2015. The effect of corporate governance practices
on earnings management of companies listed at the Nairobi securities exchange. European
Scientific Journal, ESJ, 11(1).
Ko, H.C.A., Tong, Y.J., Zhang, F.F. and Zheng, G., 2016. Corporate governance, product market
competition and managerial incentives: Evidence from four Pacific Basin countries. Pacific-
Basin Finance Journal, 40, pp.491-502.
Leung, S., Richardson, G. and Jaggi, B., 2014. Corporate board and board committee
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Lins, K.V., Servaes, H. and Tamayo, A., 2017. Social capital, trust, and firm performance: The
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Low, D.C., Roberts, H. and Whiting, R.H., 2015. Board gender diversity and firm performance:
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CORPORATE GOVERNANCE ON COMPANY PERFORMANCE IN HONG KONG
Michael, B. and Goo, S.H., 2015. Corporate governance and its reform in Hong Kong: a study in
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Singh, S., Tabassum, N., Darwish, T.K. and Batsakis, G., 2018. Corporate Governance and
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