Skip to main content


An evaluation of corporate governance evaluation, governance index (CGI NK) and performance: Evidence from Chinese listed companies in 2003

  • 2853 Accesses

  • 2 Citations


In the present paper, based on samples of 2003, empirical analyses of Corporate Governance Index (CGI NK) and its six dimensions of listed companies in China, the index of controlling shareholders’ behaviors, board governance index, top management governance index, information disclosure index, stakeholders’ governance index, and supervisors committee governance index, are carried out and the results show that CGI NK is positively associated with the return on assets (ROA), net assets per share (NAPS), earnings per share (EPS), operating cash flow per share (OCFPS), total assets turnover (TAV), rate of total assets growth (ITA) and Z-score. These indicate that good corporate governance mechanisms improve profitability, stock expansion ability, operating efficiency, growth and development potential, as well as financial flexibility and safety of listed companies. Corporate governance mechanisms of controlling shareholders, board of directors, top management, information disclosure, stakeholders and supervisors committee are largely responsible for decision-making and decision-execution mechanisms, and furthermore, they have direct and profound effects on the performance and value of listed companies.


  1. Berle A A, Means G C (1932). The Modern Corporation and Private Property. New York: The Macmillan Company

  2. Chen C J P, Chen S, Su X J (2001). Profitability regulation, earnings management, and modified audit opinions. Auditing: A Journal of Practice & Theory, 20(2): 8–30

  3. Demínor Co. (1999). Corporate Governance Rating Services—the Global Corporate Governance Benchmark Applied to Europe. Press release

  4. Donaldson L, Davis J H (1991). Stewardship theory or agency theory: CEO governance and shareholder returns. Australian Journal of Management, 16(1): 49–64

  5. DWS Investment (2000). DWS Corporate Governance Survey 2001—European Corporate Governance Ranking Report-Euro Stoxx 50. Frankfurt: DWS Investment GmbH

  6. Hermalin B E, Weisbach M S (1991). The effects of board composition and direct incentives on firm performance. Financial Management, (20): 101–112

  7. Jackson M (1950). The Scientific Appraisal of Management: A Study of the Business Practices of Well-managed Companies. New York: Harper

  8. Jensen C M (1993). The modern industrial revolution, exit, and the failure of internal control systems. Journal of Finance, (48): 831–880

  9. Kaplan S (1989). The effects of management buyouts on operating performance and value. Journal of Financial Economics, 24(2): 217–254

  10. Kim E H, Durnev A (2005). To steal or not to steel: Firm attributes, legal environment and valuation. Journal of Finance, 60(3): 1461–1494

  11. Klapper L F, Love I (2002). Corporate Governance, Investor Protection, and Performance in Emerging Markets. Policy Research Working Paper Series 2818. Geneva: The World Bank

  12. Leech D, Leahy J (1991). Ownership, structure, control type classifications and the performance of large British companies. The Economic Journal, (101): 1418–1437

  13. Li Wei’an, Tang Yuejun (2005). Stakeholders’ governance mechanisms, governance index and corporate performance of listed company. Management World Magazine, (9): 127–136 (in Chinese)

  14. Lloyd W P, Jahera J S, Goldstein S J (1986). The relation between returns, ownership structure, and market value. Journal of Financial Research, (9): 171–177

  15. Morck R, Scheifer A, Vishney R W (1988). Management ownership and market valuation. Journal of Financial Economics, 20(1): 293–315

  16. Newell R, Wilson G (2002). A premium for good governance. The McKinsey Quarterly, (3): 20–23

  17. Nikos V (1999). Board meeting frequency and firm performance. Journal of Financial Economics, 53(1): 113–142

  18. Organization for Economic Cooperation and Development (1999). OECD Principles of Corporate Governance. Washington, DC: OECD

  19. The Project Team for Corporate Governance Appraisal of the Research Center for Corporate Governance at Nankai University (2004). The Chinese corporate governance index of listed companies and empirical research of governance performance. Management World Magazine, (2): 63–74 (in Chiense)

  20. The Project Team of the Research Center for Corporate Governance at Nankai University (2003). A study of appraisal system of corporate governance for Chinese listed companies. Nankai Business Review, (3): 4–12 (in Chinese)

  21. Yeh Y H, Lee T S, Ko C E (2002). Corporate Governance and Rating System. Taipei: Sunbright Publishing Co. (in Chinese)

  22. Yermack D (1996). Higher market valuation of companies with a small board of directors. Journal of Financial Economics, (40): 185–211

Download references

Author information

Correspondence to Yuejun Tang.

Additional information

Translated from Zhongguo Gongye Jingji 中国工业经济 (China Industrial Economy), 2006, (4): 98–107

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Li, W., Tang, Y. An evaluation of corporate governance evaluation, governance index (CGI NK) and performance: Evidence from Chinese listed companies in 2003. Front. Bus. Res. China 1, 1–18 (2007).

Download citation


  • evaluation of corporate governance
  • Corporate Governance Index (CGI NK)
  • corporate governance mechanisms
  • corporate performance