Corporate Governance Research Analysis

This assignment requires a detailed review of 17 research papers on corporate governance, focusing on their impact on firm performance, institutional context, and social responsibility. The papers cover topics such as the relationship between corporate governance and firm value, stakeholder-centric governance, and the role of boards in CEO compensation. The analysis will provide insights into the effectiveness of corporate governance practices and their influence on organizational performance.

Running head: CORPORATE GOVERNANCE ON THE COMPANY PERFORMANCE IN
HONG KONG
Corporate Governance on the company performance in Hong Kong
Name of the Student:
Name of the University:
Author’s Note:

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CORPORATE GOVERNANCE ON THE COMPANY PERFORMANCE IN HONG KONG
Abstract
This paper is concerned with understanding the relationship and the impact of corporate
governance on the performance of a company. The research has concentrated on the companies
that are operational in Hong Kong. In the initial section, the background of the topic and the
country that has been selected is explained in order to introduce the topic. The aims and the
research questions that are essential in order to have an understanding of the course that will be
taken in order to complete the paper has been framed. The various theories and the variables that
are related to corporate governance and the business performance of a company are explained
succinctly so that an idea about all the theories and the framework would be known. The kind of
data that has been collected and the method of data collection is even addressed in this paper so
that the reader can have extensive knowledge about the entire process that has been used in order
to conclude this paper. In this paper secondary data has been used in order to find the desired
results. Finally, analysis of the collected data is helpful in explaining the impact of corporate
governance in performance of a business.

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Table of Contents
Chapter 1: Introduction....................................................................................................................4
1.1 Background of the Study.......................................................................................................4
1.2 Rationale of the Study...........................................................................................................6
1.3 Research Aims and Objectives..............................................................................................6
1.4 Research Question.................................................................................................................7
Chapter 2: Literature Review...........................................................................................................8
2.1 Introduction............................................................................................................................8
2.2 Agency Problems...................................................................................................................8
2.3 Corporate Governance and firm performance.....................................................................10
2.4 Board composition and company performance...................................................................12
2.5 Summary of the literature....................................................................................................13
Chapter 3: Research Methodology................................................................................................14
3.1 Introduction..........................................................................................................................14
3.2 Justification of the choice of methodology..........................................................................14
3.3 Research Philosophy............................................................................................................15
3.4 Research Approach..............................................................................................................15
3.5 Research Design..................................................................................................................15
3.6 Data Collection Process.......................................................................................................16
3.7 Process of data analysis.......................................................................................................16

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3.8 Ethical Consideration...........................................................................................................16
Chapter 4: Data Analysis and Discussion......................................................................................17
4.1 Introduction..........................................................................................................................17
4.2 Company Performance........................................................................................................17
4.3 Corporate Governance.........................................................................................................21
Chapter 5: Conclusion, Recommendation and Future Work.........................................................24
5.1 Conclusion...........................................................................................................................24
5.2 Recommendation.................................................................................................................25
5.3 Future Research...................................................................................................................25
Reference List and Bibliography...................................................................................................26

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CORPORATE GOVERNANCE ON THE COMPANY PERFORMANCE IN HONG KONG
Chapter 1: Introduction
1.1 Background of the Study
The researches on corporate governance have become extensively popular in the current
years. Corporate governance has become an issue in the developing economies after the financial
crisis and the scandals that have occurred in the past, which have led to rise in demand for
enhanced corporate governance mechanisms. Effective level of corporate governance has
become necessary for developing and improving the performance of a company, ensuring the
rights of the investors, developing the investment environment and influencing development of
the economy (Low, Roberts and Whiting 2015). Even though focus and attention has been given
to the corporate governance in the developing countries, there have been several countries that
still suffer from the inadequacy of corporate governance structure. This is looked upon as a
contributing factor for the rise in the financial crisis and financial scandals. Hence, corporate
governance in the developing and developed nations has motivated and attracted reasonable
consideration in the academic researches.
Corporate governance is the practices and the rules that administer the relationship
between the shareholders and the managers of a company as well as with the stakeholders. It
contributes to the development and financial stability by developing the confidence in the
market, financial reliability and effectiveness of the economy. As a consequence, corporate
governance distributes the obligations and the rights among the several respondents within a
firm, like the managers, boards, shareholders and the other stakeholders and confirms that the
procedures and the rules for undertaking decisions with respect to the corporate affairs are
precise and clear (Cheng, Lui and Shum 2015). The practice of corporate governance is
regarded as an internal process for controlling and monitoring the management. Effective level

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of corporate governance is good equipment for assisting a company to reach effective and better
performance.
The concept of corporate governance in the developed nations and economies like Hong
Kong has been addressed by making use of several theories and articles. In accordance to the
agency theory, the intention of corporate governance is to minimize the probable conflicts among
the managers and the shareholder’s interest (Leung, Richardson and Jaggi 2014). The
stakeholder theory even has a key role to play in addressing the governance framework as the
organizations are made conscious of all the stakeholders rather than only the shareholders. Wang
et al. (2014) have debated that stakeholder theory can be helpful in optimizing the performance
of an organization and the associated benefits of all the stakeholders by taking care of the
interests of all the stakeholders.
In the current Asian market, there are more than 65% of the listed companies that are
managed by the key shareholders and from those companies, more than 60% of the managers are
acquaintances of the main shareholders. In Hong Kong, it is seen that family business is one of
the forms of business and most of these companies have attained the mature or the developing
stage. It is seen that businesses in Hong Kong is a combination of the control and ownership and
therefore the organizations that are functional in the country have an effective and profitable
ownership framework than the companies in the other nations (Ayuso et al. 2014). This research
paper has therefore been constructed in order to have an understanding of the impact of corporate
governance on the performance of the companies from various sectors in Hong Kong. The paper
in order to assess the performance of a company would look to collect secondary data with the
help of which the researcher would be able to understand the performance of a company in
accordance to corporate governance in an effective manner.

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1.2 Rationale of the Study
The justification for undertaking research on this topic has been due to the fact that
corporate governance has been receiving greater extent of popularity among all the companies
globally and accordingly the performance of an organization plays a key role in the development
of the company as a whole (Foo 2015). There are several factors that has an impact on the
performance of an organization but special importance is given to corporate governance as this
process assists in improving internal and external relationship among the associated stakeholders
and thereby an idea can be attained as to the effectiveness of relationship of the stakeholders in
the development of the performance of a company.
1.3 Research Aims and Objectives
The aims and objectives of the research determines the elements and the aspects that would
be taken into consideration when taking the research forward and thereafter finding the results
that would be helpful in determining the impact of corporate governance in the performance of
the companies that are operational in Hong Kong. The research aims and objectives are as
follows:
 Assess the nature and the level of development of corporate governance processes in the
aspect of the business environment of Hong Kong
 Determine the relationship between the corporate governance practices and the
performance of the companies in Hong Kong.
 Recognize the theories and the concepts that are associated to corporate governance and
the extent to which they are accepted in a company in Hong Kong

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1.4 Research Question
The research question that is related to this paper is as follows:
Q1. Is the corporate governance framework of a company important to the performance of a
company in Hong Kong?
Q2. How to create an effective corporate governance policy in order to attain the optimal
performance in the companies in Hong Kong?

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Chapter 2: Literature Review
2.1 Introduction
The factors that are having an impact on the process of corporate governance is inclusive
of the structure of shareholding, composition of board and the senior level management. The
relationship between the performance of a company and the factors is the pivotal point for
various researchers and their studies. This section of the paper would address all the factors and
what other researchers have commented on these factors and the overall corporate governance
structure.
2.2 Agency Problems
Michael and Goo (2015) debated that the interest conflicts and the asymmetries among
the managers and the shareholders are the key reason that makes the shareholders suffer
increased agency costs. Their suggestion was to reinforce the governance and the legal
framework in order to evade the managers who look into their own interest and ignores the rights
of the shareholders.
Siddiqui (2015) explained agency relationship as the owner agreements with the manager
in order to perform the services on their behalf. The presence of agency problems is due to the
fact that the managers would not always act in the most precise interest of the shareholders in
order to gain individual benefits. Conversely, the shareholders look to safeguard their interests
by suffering administration costs in order to make sure that the managers will not undertake any
actions which can hamper their wealth. There are several techniques that tries to explain the
agency problems and they are inclusive of the structure of the government, managerial
ownership incentives and capital structure.

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Lins, Servaes and Tamayo (2017) stressed on the conflicts among the managers and the
shareholders and explained that these issues that are essential in a company that have sustainable
level of free cash flows. The theory of free cash flow recommends that the managers will not
always look to optimize the company value. Furthermore, free cash flow is the cash flow that is
more than the one that is needed to fund all the projects that have net present values to be
positive. On the other hand, if a company is able to create considerable fee cash flows, the
managers may spend in excess on the organizational ineffectiveness or undertake investments in
the projects with negative net present value, which in a way can hamper the wealth of the
shareholders. Furthermore, Bazrafshan, Kandelousi and Hooy (2016) cited that conflict among
the shareholders and the managers is because of the aversion of the managerial risk. The
shareholders always looks spread their investments in order to minimize the risks that are
associated with their investments. Conversely, the majority of the manager’s income comes from
the bonuses, which is reliant on the returns gained by the organization. Hence, for the same
investment project, the extent of risk that the managers and the shareholders can incur is different
(Singh et al. 2018). The managers may not look to undertake the risk that will lead to loss of
some effective investment opportunities and therefore the conflicts among the managers and the
shareholders take place.
The easiest and the most practicable way to resolve this issue of agency problem is to
terminate the separation among the control and ownership in an organization. However, the
separation of the control and the ownership is to provide advantage to the organization as it
reveals the ideal competitive response to the creation of the ownership framework of an
organization (Beatson and Chen 2017). Then, the managers are go ahead with their own interests
simultaneously without profaning the interests of the shareholders.

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2.3 Corporate Governance and firm performance
The domestic and the international agencies and authorities have given increasingly and
extensive focus to assess and modify the law of an organization after the Enron and Worldcom
scandals that occurred in USA. According to Kun (2015), Hong Kong has currently created a
precise outline of the obligated arrangements of corporate governance.
The aim of corporate governance is to organize an interest conflict among the
relationship of all the parties within a company and to create a system that can mitigate or
terminate the agency issues (Fung 2014). It debates that the agency issues become more complex
with ineffective and weaker corporate governance and restricted safeguard of the minority
shareholders within an organization and even provides the effective corporate governance that
would be able to assist the board of directors and even the managers to attain the effective
interests of the shareholders and the organization.
Furthermore, it can be debated that the performance of a company can be developed with
effective control of the corporate governance in a firm. Cuomo, Mallin and Zattoni (2016)
debated that the corporate governance does not have an impact on the performance of a
company. They discovered that most of the bigger companies with stronger and better corporate
governance controls are rewarded during the longer period of time. Olivares-Caminal et al.
(2017) studied the relationship among the value of the company and corporate governance by
making use of the Tobin’s Q and Corporate Governance Index (CGI), which looks to compute
the value of an organization. The outcome has provided that corporate governance do have an
impact on the value of a company.
Furthermore, Kula and Baykut (2014) debated that an effective corporate governance
standard is specifically vital for the banks. This is due to the fact that most of the money that the

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banks utilize for the purpose of business comes from the depositors and the creditors. The
ineffectiveness of a bank will impact not only their own shareholders but a key impact would be
observed on the other banks as well. Hence, it is essential to make sure that the banks are
functioning in an effective manner. Dias, Rodrigues and Craig (2017) even explained that
corporate governance of the banks in Hong Kong has an effective standard due to the fact that
the Hong Kong Monetary Authority has provided a guideline in association to corporate
governance for the banks.
It is seen that a various other research have been undertaken in order to have an
understanding among the relationship between performance of a company and the ownership
framework. Husted and de Sousa-Filho (2017) explained that increased ownership focus has an
optimistic effect on the performance of a company as it increases the capability of the
shareholders to effectively looking after the managers. Al-Janadi, Abdul Rahman and Alazzani
(2016) even debated that increased level of block-holder is likely to have an effect on the value
of the company. The bigger shareholders can function in an effective manner for administering
the managers in order to safeguard the probable takeover challenges.
By relying on the corporate governance framework, the directors and the board of
directors will be the key policy setters of an organization and therefore the relationship among
the board composition framework and the performance of the company is very close (Wong
2016). It is known that composition of the board is section of the corporate governance, so the
research takes a step ahead in order to assess the relationship among the composition of the
board and the performance of a company.

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2.4 Board composition and company performance
Shahzad, Rutherford and Sharfman (2016) debated that board of director members are
essential for the long term development and effective performance of a company. The board of
directors is a group of collective people who are appointed by the company shareholders and are
accountable for undertaking decisions and monitoring the daily activities of the company. The
presence of the board of directors is key and essential. In the day to day activities, it is very
difficult to create explained decisions with the help of the regular meetings with the shareholders
specifically for public listed organizations which have huge number of shareholders. With the
help of effective administration towards the operations of the company, the board of directors
makes sure that the company functions in the course that is beneficial to the shareholders.
Furthermore, Tang et al. (2015) cited that the board of directors needs to play a pivotal
role in permitting the strategy and the plans for business for a company. The board of directors
needs to supervise and monitor the management performance in order to make sure that company
functions their business with increased level of ethical standards. Iraya, Mwangi and Muchoki
(2015) expressed that the board of directors should comprise of a blend of the executive and non-
executive free directors. It even requires the segregation of the roles of the Chairman of the
Board of Directors and the CEO of an organization.
In a current research that was undertaken by Ko et al. (2016) on the corporate governance
in the economy of Hong Kong debated that the member quality in the board of directors is
essential in order to attain increased standard of corporate governance. They examined numerous
boards of directors of the listed companies in Hong Kong and discovered that a board where
most of the directors have Master degree are looked upon to have higher standard.

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Qian et al. (2017) assess the performance of a company with the help of Tobin’s Q and
discovered that the Tobin’s Q enhances in the initial stage and thereby showing a positive
relationship among the share framework and the value of the company; and decline in the latter
stage discloses a negative association among the share framework and the value of a company. It
is therefore said that the relationship among the structure of the share and Tobin’s Q is non-linear
in nature.
2.5 Summary of the literature
The prior academic research has been broadly explaining the topic of corporate
governance in the various industries of Hong Kong. It has been discovered that agency issues do
not have an effect on the performance of a company and corporate governance is undertaken in
order to mitigate or eliminate the issue. The several researches on the composition of the board
explains that the segregation of the function of the chairman of the board of directors and the
CEO of an organization is essential. Furthermore, an effective quality member of the board of
directors is the key requirement for the effective level of corporate governance practice.

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Chapter 3: Research Methodology
3.1 Introduction
This section of the paper has been created in order to have an effectual understanding of
the sort of data or information that would be used for the purpose reaching authentic results for
this paper. There are several techniques that are available to the researcher and it is the selection
and the choice of the researcher to have a key understanding of the tools and the processes that
would be used in order to obtain the data and thereafter take extensive actions with the help of
which data analysis can be undertaken. The methodology section will highlight the kind of
philosophy, research design and approach, process of gathering the data, techniques used for the
purpose of data analysis and the ethics that would be considered by the researcher while
collecting the data.
3.2 Justification of the choice of methodology
The kind of methodology that would be used in a research determines the extent and the
preciseness in accordance to which the research paper can be completed. The choice of the
methodology is dependent on the kind of data that would be used for completing this research. In
accordance to this paper, which has the idea of understanding the impact of corporate
governance on the performance of a company, it is seen that secondary data would be used with
the help of which understanding of the performance of the companies from various sectors can
be known (Singh, Sethuraman and Lam 2017). The researcher has therefore implied qualitative
research methodology as the paper is related with understanding the performance of a company
in accordance to corporate governance structure.

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3.3 Research Philosophy
The research philosophy is associated to gaining an understanding of the idea,
understanding and opinion about the technique and the procedure by taking support of which the
data related to the topic can be collected and recorded (Abdallah and Ismail 2017). The three
sorts of philosophies are interpretivism, pragmatism and positivism. In this paper, however, the
researcher has opted for positivism philosophy because of the fact that a positive elucidation of
the collected data would be undertaken by the researcher in order to gain effective results.
3.4 Research Approach
The research approach defines the frameworks and the theories that would be taken into
account in order to complete the research paper in an effective manner (Scholtz and Smit 2015).
In this paper, as the researcher would be making use of secondary data, which is already
available in the economy with respect to corporate governance and their relation with the
performance of an organization, deductive approach will be undertaken. Inductive approach is
not taken into consideration as no new theories and frameworks would be used by the researcher.
3.5 Research Design
The design of the research is associated to discovering the processes and the framework
that would be used in order to collect and record the data and thereby take the research forward
in an effective manner (Usman, Akhter and Akhtar 2015). In this context, the researcher has
adopted descriptive research design with the help of which the all the data that has been collected
would be defined and explained in order to attain effective results for this paper.

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3.6 Data Collection Process
The researcher in accordance to this paper has selected secondary data with the help of
which data regarding the matters related to corporate governance can be collected and
accordingly steps can be taken with the help of which impact on the performance of the company
can be attained. The secondary data is collected with the help of various resources like collecting
data from the company websites and the annual report of the companies, along with information
that is available from internet sources, electronic journals and articles (Nguyen, Locke and
Reddy 2015). These kinds of data are effective in answering the problem that is pertinent to the
research. The data would be collected from several industries of Hong Kong and one company
from each of the industries would be taken into consideration with the help of which an idea on
the topic can be understood.
3.7 Process of data analysis
The data analysis process would be undertaken by taking help of the various processes
and mechanisms with the help of which the recorded data would be useful in answering the
issues that are pertinent to the topic.
3.8 Ethical Consideration
The researcher in accordance to this paper has maintained proper codes of ethics and
therefore has all the data that has been gathered are from precise and authentic sources and
thereby authentic outcome in accordance to the research paper can be attained.

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Chapter 4: Data Analysis and Discussion
4.1 Introduction
This section of the paper tries to assess the data in relation to the various industries that
are functional in Hong Kong. The paper has selected various companies from each of the sector
and it is seen that Hang Seng Bank has been chosen from the banking sector, Samsung C&T
Corporation Ltd from the construction sector, Cathay Pacific from the airline industry and
Crocodile Garments from the consumer service industry. The companies would be evaluated in
relation to the performance of the companies and their impact on corporate governance and
thereby an understanding of the impact can be attained.
4.2 Company Performance
Hang Seng Bank
Particulars 2015 2016 2017
Tax Rate % 9.82 15.12 15.51
Net Margin % 91.83 55.36 57.39
Asset Turnover (Average) 0.02 0.02 0.02
Return on Assets % 2.12 1.2 1.38
Financial Leverage
(Average) 9.4 9.79 9.72
Return on Equity % 19.56 11.47 13.46
Financial Leverage 9.4 9.79 9.72
The financial performance for Hang Seng Bank explains that the performance of the
organization has been significantly better in accordance to the industrial benchmark of the

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industry in the year 2015. The banks that are performing in Hong Kong are performing in an
effective manner and has been making significant level of profits and accordingly Hang Seng has
been performing properly in the year 2015. However, the net margin has reduced significantly in
the next two years, which indicates that there have been certain changes, which have affected the
bank. In these two years the company has been functioning poorly in accordance to the industrial
benchmark (Bank.hangseng.com 2018). The other banks in Hong Kong have been making better
profits and accordingly it can be said that Hang Seng can perform effectively if they change their
plans and strategies.
Samsung C&T Corporation Ltd
Particulars 2015 2016 2017
Current Ratio 0.83 0.91 0.85
Quick Ratio 0.61 0.72 0.65
Financial Leverage 2.57 2.43 2.17
Debt/Equity 0.24 0.2 0.12
The performance of the company has been understood with the help of the financial data
that is seen from the annual report of the company. The financial performance of the company
explains that the current ratio, quick ratio, financial leverage and the debt/equity ratio have been
effective and thereby indicating that the company has been making significant level of profit
(Samsungcnt.com 2018). On the other hand, the performance of the overall construction industry
of Hong Kong has shown that the overall performance of the industry has been in line with the
figures that have been shown for Samsung C&T Corporation.
Cathay Pacific

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Cathay Pacific is a leading airline industry which has headquartered in Hong Kong and
operates globally. The financial performance for the company for the years 2015, 2016 and 2017
have been taken into consideration in order to have an understanding of the actual scenario of the
company. The results are given as follows:
Particulars 2015 2016 2017
Current Ratio 0.73 0.67 0.71
Quick Ratio 0.69 0.61 0.68
Financial
Leverage 3.33 3.6 3.2
Debt/Equity 1.07 1.04 1.06
The ratios that have been obtained explain that all the ratios have been performing
efficiently and the company has been able to take care of their assets and liabilities in an
effective manner. The financials of the company indicates that the company has been making
profits and has been able to meet their goals and objectives. In accordance to the industrial bench
mark, the company has been incredibly well in terms of the making profits and increasing their
customer base and service quality (Cathay Pacific 2018). The airline industry in the country has
been making significant amount of profit and Cathay Pacific is one of the leading companies that
has been the key driver of the industrial development. The company has their own internal
regulatory management process with the help of which the company has been governing their
operational and functional activities and thereby maintaining effective workflow.
Crocodile Garments Ltd
Particulars 2015 2016 2017
Current Ratio 0.61 0.96 0.88

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Quick Ratio 0.45 0.79 0.75
Financial
Leverage 1.45 1.48 1.45
Debt/Equity 0.02 0.18 0.16
This company is a Hong Kong based organization who have their operations focused on
apparel and retail industry sector. The company is a well known brand and has their business
established globally. The retail sector in Hong Kong has been a developing area and with the rise
in demand for clothing and apparel, the company has been manufacturing various kinds of new
and improved products that have been able to attract new and potential customers
(Crocodile.com.hk 2018). By observing the financial figures of the company, one can say that
the company is making profits for all the three years that have been taken into consideration and
have been the various ratios that are available from the company indicates that the company has
been able to maintain their assets and liabilities in a more effective manner. The company has
their debt to equity ratio to be proper and therefore all the financials explain that the company
has proper and precise profit level and with their internal regulatory body and effective
management system, the organization has been able to move forward in accordance to their pre-
determined goals and objectives (Crocodile.com.hk 2018). The industrial benchmark of the
industry reveals that the retail and apparel business has been making huge level and margin of
profit as they have been able to satisfy their customers domestically and globally.
The results indicate that all the companies that have taken into consideration has been
performing well for all the three years except for Hang Seng Bank, who has been functioning
well but has not been able to stay in line with the benchmark of the industry.

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4.3 Corporate Governance
This is known as the practices, rules and processes with the help of which an organization
is managed and controlled. Accordingly, all the companies that have been taken into
consideration will be processed in order to have an understanding of the corporate governance
technique they have incorporated.
Hang Seng Bank
It is seen that this bank has their own internal control process and has their own
department who are associated with looking into the control system and making changes
wherever necessary. The bank does not have a corporate governance strategy and therefore does
not include any disclosure statement where all the strategies and plans are written and
accordingly the company can undertake their actions and operations (Bank.hangseng.com 2018).
By looking at the performance of the company, it can be said that the company can incorporate
corporate governance and thereby would be able to improve their operational activities. The
incorporation of the corporate governance technique can be useful in improving their financial
performance and accordingly can be helpful in maintaining competitive edge.
Samsung C&T Corporation Ltd
This company is associated with the construction industry and this organization has been
operating successfully in the economy for a long time (Samsungcnt.com 2018). The company
has their own corporate governance structure and has maintained general rules of plans and

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policies with the help of which they have been governing their functional and operational
activities and thereby has been able to sustain a effective working business.
Cathay Pacific
The organization functions their business globally and therefore maintains various kinds
of strategies and policies that are helpful in operating their business in different parts of the
world. The company has their own corporate governance strategy and this strategy varies
according to the country where the company operates. In Hong Kong, the company has their own
and unique corporate governance plans and accordingly the management functions their business
accordingly (Cathay Pacific 2018). The proper corporate governance plan according to the
international standards has been able to improve the operational as well as the profit level of the
company.
Crocodile Garments Ltd
The data that has been collected for this company explains that the company has been
performing effectively but does not have a proper and authentic corporate governance structure.
The company has their own internal regulatory body that keeps a check over the relationship
outside and inside the company and thereby is able to operate their business (Crocodile.com.hk
2018). It can be said that incorporation of corporate governance can be a better technique with
the help of which the company can enhance their profit as well as their business.
The results therefore indicate that corporate governance can improve the business performance
of a company in Hong Kong and it is the role of the company to determine what kind of
strategies can be used in order to improve their business and increase their level of profit.

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Chapter 5: Conclusion, Recommendation and Future Work
5.1 Conclusion
The analysis of the performance of the companies that have been chosen from different
sectors provide an indication that all the organizations are performing properly in the Hong Kong

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economy, but it is seen that the companies that have not implemented corporate governance
technique has the scope of improving their operational activities. Corporate governance is
helpful in maintaining a healthy and cordial relationship among the stakeholders and the
management of a company and thereby is useful in making decisions that are useful for all the
parties who are involved with the company. As a whole after, the examination of the market of
Hong Kong, there has been an observation that most of the companies of Hong Kong do not have
any corporate governance policies. Corporate governance is only seen in a few of the bigger
companies and therefore it can be said that incorporation of corporate governance can bring in
diversified changes in the companies as well as in the economy of Hong Kong. The paper has
been able to address the objectives that were constructed earlier in the paper as it is seen that the
results have shown the nature of development of the corporate governance process in Hong Kong
and in the business environment has been explained. The paper has even been able to ascertain
the relationship among the corporate governance practice and the performance of the firms in
Hong Kong. The theories that are related to corporate governance has even been explained and
thereby the conclusion of the paper is able to express the fact that corporate governance has an
essential role to play in the development of the performance of the companies that are
operational in Hong Kong.
5.2 Recommendation
The paper with the help of the results that have been attained has been able to generate
few recommendations that is advisable to the companies of Hong Kong, which can be helpful in
improving their operational activities. It is recommended that the companies who have not

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incorporated the strategy gains knowledge about the corporate governance practice and thereafter
take measures that would be helpful in improving their functional activities. On the other hand,
the companies who have incorporated the corporate governance practice and maintain a frequent
assessment of the process so that they can make changes in the aspects that are not performing in
an effective manner. It is even advisable that the management of the companies assess the market
from time to time and interact with the stakeholders as time changes in order to have an idea
about what changes are required by the stakeholders and whether these changes will be helpful to
the organizations and thereby undertake changes that would be helpful in enhancing the
performance of the company.
5.3 Future Research
The current topic that has been taken into consideration has huge scope of future research
because of the fact that as time changes, the tastes and preferences of the consumers would
change as well and accordingly changes will be observed in the corporate governance practices
and strategies as well. Undertaking a research at a future course of time will be helpful in
determining the changes and the developments that have been made and comparisons with the
current research would helpful in understanding whether the changes that have been incorporated
are for the better or for worse.

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