The relationship between power concentration in firms and their financial performance : evidence from mainland China

Pao Yue-kong Library Electronic Theses Database

The relationship between power concentration in firms and their financial performance : evidence from mainland China

 

Author: Au, Mo-cheung
Title: The relationship between power concentration in firms and their financial performance : evidence from mainland China
Degree: D.B.A.
Year: 2008
Subject: Hong Kong Polytechnic University -- Dissertations.
Corporate governance.
Corporations -- China -- Management.
Corporations -- China -- Finance.
Department: Graduate School of Business
Pages: vi, 183 leaves : ill. ; 30 cm.
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b2240595
URI: http://theses.lib.polyu.edu.hk/handle/200/5329
Abstract: This research is interesting as it introduces a new construct, power concentration in firms "PowCon" one of the corporate governance variables. The formation of this new construct was inspired by Premier Wen's statement showing his concern about the over-concentration of power in the Mainland which is the most important reason causing corruption. "PowCon", together with some other corporate governance variables, is applied to investigate their relationships with the financial performance of mainland listed firms. There are some previous corporate governance studies of CEO duality, concentrated shareholdings, board structures, INEDs and government influence but to the best of my knowledge, there is no prior research on power concentration in firms. It is therefore believed that this is the first investigation into power concentration in mainland listed firms. Some special characteristics of listed firms hi the Mainland are discussed in this thesis. The main investigation result meets my prediction but it contradicts agency theory and some other corporate governance research. My test result shows that power concentration in firms has a positive association with financial performance, which supports stewardship theory rather than agency theory. In many other research studies, CEO duality and concentrated shareholdings in firms have been criticized as causing a negative impact on financial performance. This study explains "PowCon" from another perspective and argues that it may not be a bad thing as it can help operational efficiency under stewards with "PowCon".

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