Corporate governance practices and firm performance in the technology sector

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Abstract

This study examines the impact of corporate governance on firm performance within listed technology corporations in the Greater Bay Area (GBA) of China, particularly in Hong Kong and Shenzhen. It employs data from the Hang Seng TECH Index and the SME-ChiNext Tech 100 Index covering the period 2016 to 2022 to assess the influence of corporate governance on crucial financial performance metrics such as return on equity (ROE), return on assets (ROA), and Tobin’s Q. Despite incorporating five control variables to account for extraneous factors, the analysis reveals no significant correlation between corporate governance practices and the operational or financial outcomes of these companies. Notably, the governance level is recorded at 47.2 percent, underscoring a unique regional governance context. This research enhances understanding of corporate governance’s role in the technology sector, echoing the findings of Alzubi and Bani-Hani (2021) on capital structure and Ulfah et al. (2022) onboard structure and earnings management. The insights garnered are particularly valuable for policymakers and investors navigating the dynamic economic landscape of the GBA.

Keywords: Greater Bay Area (GBA) of China, Corporate Governance, Firm Performance, Agency Theory, China’s Corporate Governance Code, China Securities Regulatory Commission (CSRC), Corporate Governance Code and Corporate Governance Report (Code), Technology Industry

Authors’ individual contribution: Conceptualization — P.C.W.Y.; Methodology — P.C.W.Y. and T.T.K.Y.; Validation — P.C.W.Y. and T.T.K.Y.; Formal Analysis — P.C.W.Y. and T.T.K.Y.; Investigation — P.C.W.Y. and T.T.K.Y.; Writing — Original Draft — P.C.W.Y. and E.P.; Writing — Review & Editing — P.C.W.Y. and E.P.; Visualization — P.C.W.Y. and E.P.; Supervision — P.C.W.Y.; Project Administration — P.C.W.Y. and E.P.; Funding Acquisition — P.C.W.Y.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G32, G34, K33, K42, L25, M41, M42

Received: 16.01.2024
Accepted: 10.07.2024
Published online: 12.07.2024

How to cite this paper: Yip, P. C. W., Pang, E., & Yu, T. T. K. (2024). Corporate governance practices and firm performance in the technology sector [Special issue]. Corporate Governance and Organizational Behavior Review, 8(2), 377–387. https://doi.org/10.22495/cgobrv8i2sip12