Title: Corporate Governance, Political Interference, and Corporate Performance of China's Listed Companies
Reference Number: 1037
Publication Date: March 2002
JEL Classifcation: G34, G38, P26
Author(s):

Eric Chang
The University of Hong Kong

Sonia Wong
The University of Hong Kong

Abstract:

In the corporate governance literature, the notion that political interference in enterprise decision-making is detrimental to corporate performance is widespread and is buttressed by a large body of theoretical studies. However, few empirical studies support the theories these studies espouse. For our study, we construct measures with which to capture political interference in the decision-making of China's listed companies and perform direct tests to determine the relationship between political interference in the decision-making of these companies and their performance. We offer evidence that political interference in these companies' decision-making negatively affects their performance. This study not only addresses an important corporate governance issue for China's listed companies but also brings together the theoretical and empirical aspects of the corporate performance implications of political interference.

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Key words: Corporate Governance, Political Interference, Corporate Performance, China's Listed Companies

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Last modified: 08/29/2002