Background of the Study
In the current time period due to the consequence of certain governance issues that is taking place, corporate governance has become essential and have re-developed as one of the most key topics of the business (Low, Robertsand Whiting 2015). There have been several debates and therefore evaluations have been made for many years in the global economy.
Cheng, Lui and Shum(2015) explained that in the market driven economies like in the countries like USA and UK, it is seen that privatization, free movement of the capital and regulation of the market has been enhancing the culture towards equity investment all over the globe. However, it is seen that rise in the frequency and the sternness of the corporate issues have become invaluable and this makes the companies move towards the limelight. It has been able to draw attention due to the faults within the governance can have significant amount of impact on a very large number of stakeholders who are inclusive of pensioners, clients, suppliers, employees, shareholders etc (Leung, Richardson and Jaggi 2014).
It is even seen that the errors within the governance may lead to various kinds of managerial issues that may be inclusive of insolvency, reputational damage and bankruptcy (Lo and Kwan 2017). There have been certain adverse and several issues that have taken place in the recent years that had an impact on various companies like Enron, Kirch Media, Andersen etc and this has signified that small issues related to governance that become larger problems if they are ignored. Hence, the issues related to corporate governance needs to be resolved as fast as possible or else any kind of ignorance and postponements can have adverse impact on the goodwill of an organization and shareholder value in the market (Ortas et al. 2015).
Background of the Study
The corporate governance practises that are seen in the companies that are operational in Hong Kong has been evaluated with the help of various kinds of research papers and models. It is known that most of the companies that are operational in Hong Kong are managed by the stakeholders related to the organizations. Pratheepkanth, Hettihewa and Wright (2016) have cited that a large number of companies are family based businesses and therefore they have been maintaining internal governance in order to maintain effective operational activities. The businesses in Hong Kong are a combination of ownership and control and therefore the companies have their own ownership model that is useful for the increase in the level of profitability (Ayuso et al. 2014). Hence, it is seen that corporate governance of the companies has an influential role in the development of the performance of the companies in Hong Kong. This research would therefore look to assess the same and discover effective results.
Rationale of the Study
The development of the global economy has showcased the rise in the popularity of corporate governance and this has been mainly due to the rise in the efficiency level of the companies in accordance to their performance (Siddiqui 2015). Corporate governance is helpful in the development of the external and internal relationships among the stakeholders of the companies and therefore assessment on this topic would lead to the generation of new and improved ideas and results (Usman, Akhter and Akhtar 2015).
Rationale of the Study
Research Aims and Objectives
The aims and objectives of the research are given as follows:
- Evaluate the extent of development of the corporate governance procedure with respect to the working environment of Hong Kong.
- Ascertain the relationship among the practices of corporate governance and the organizational performance in Hong Kong.
- Identify the concepts and the theories that are related to corporate governance and the extent to which the companies in Hong Kong accept with the same.
- Research Question
The questions that would be determined in accordance to this topic has been given as follows:
Q1. What is the level of significance of the corporate governance framework to the development of the performance of the organizations operational in Hong Kong?
Q2. How can an efficient corporate government policy useful in the order to reach the optimal operational performance of the companies in Hong Kong?
Literature Review
The review of literature is useful for creating an idea about the recommendations and the suggestions that have been provided by other researchers (Bazrafshan, Kandelousi and Hooy 2016).
There are several approaches that are available for use but it is seen that incorporation of the approach would be on the basis of their strength and weakness (Fung 2014). It is seen that corporate governance brings about the development in the operational activities however, the process that would be used by the management for the incorporation of the same would determine its effectiveness. Al-Janadi, Abdul Rahman and Alazzani (2016) explained that there have been lots of debates that have been taking place with respect to the strengths and weaknesses and the most of the studies have found that strengths of corporate governance approaches are higher than their weaknesses.
It is simply due to the fact that corporate governance is helpful in the development of the profitability and the performance of the companies. In the same manner, corporate governance is even helpful in improving the motivation of the employees, which in turn would improve the operational activities as well (Ko et al. 2016).
In a summary it can be ascertained that corporate governance is helpful in the development of the performance of the companies as most of the researches that have been evaluated agrees to the same (Ntim et al. 2017).
Iraya, Mwangi and Muchoki (2015) explained that families and individuals, financial companies and institutions may have various kinds of objectives, skills of monitoring and various kinds of assessment incentives.
Wong (2016) assessed the role of the various corporate governance processes and thereby provides proof in relation to the interdependence among these processes. It can therefore ben concluded that one of the processes is looked upon to be effective in one place may not be related positively to the performance of the companies elsewhere (Fan, Wong and Zhang 2014).
Arguments for and against the proposal
There are several researchers like Lins, Servaes and Tamayo, (2017), who have supported the fact that the dispersal of ownership within an organization has a positive effect on the attainment of the goal of profit maximisation of the companies as a segregation of control, especially at the moment when the CEO does not wish to act as the Chairperson simultaneously, which may develop the managers to act according to their own interests (Singh et al. 2018).
Michael and Goo (2015) explained that ineffective performance will have a negative impact on them whereas they would not be rewarded properly for effective corporate governance. The intended finding of the research has been that corporate governance is helpful in the development of the performance of a company and therefore can be concluded that incorporation of corporate governance becomes essential (Abdallah and Ismail 2017). The degree of consistency with respect to the previous researches have been positive and direct and therefore the earlier researches are helpful for this current proposal.
Research Aims and Objectives
Research Methodology
The researcher in accordance to this topic would be undertaking qualitative methodology in order to have an understanding of the effect of corporate governance on the performance of the companies in Hong Kong. The researcher would be selecting positivism philosophy as a positive explanation would be made with the help of which outcome in accordance to this topic would be attained (Nguyen, Locke and Reddy 2015).
The researcher in accordance to this topic has selected deductive approach due to the fact that secondary data would be used for the purpose of evaluation and hence, the models and the theories that have been utilised earlier by other researchers would be used with the help of which results in accordance to this topic would be ascertained (Pucheta?Martínez, Bel?Oms and Olcina?Sempere 2016).
Descriptive research design will be selected by the researcher simply due to the fact that the data that would be collected would undergo extensive explanation with the help of which the result in accordance to the topic could be attained (Tang et al. 2015).
It is seen that secondary data would be collected with the help of various journals and articles with the help of which the development of company performance in accordance to corporate governance in Hong Kong would be known (Dias, Rodrigues and Craig 2017).
Limitations
The limitations with regards to the paper has been the time horizon and the accessibility of the data. The availability of time would have provided better data with respect to which the proposal could have been constructed in a more effective manner.
Time Scale
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Selection of topic and search for justification |
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Constructing literature |
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Selecting appropriate methods |
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Data collection |
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Data analysis and representation |
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Reviewing the outcomes |
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Conclusions and recommendations |
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Submitting draft of the project |
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Printing and final submission |
Conclusion
The proposal that has been constructed has the intention of gaining proper understanding of the corporate governance in the development of the company performance in Hong Kong. The background of the paper has provided how companies in Hong Kong have incorporated corporate governance and how this has impacted their overall performance. The literature review has highlighted the key specific areas in regards to which analysis on this topic would be ascertained and understanding of the same would be attained. The methodology has determined the kind of data that would be taken into consideration with the help of which evaluation process is possible.
Reference list
Abdallah, A.A.N. and Ismail, A.K., 2017. Corporate governance practices, ownership structure, and corporate performance in the GCC countries. Journal of International Financial Markets, Institutions and Money, 46, pp.98-115.
Al-Janadi, Y., Abdul Rahman, R. and Alazzani, A., 2016. Does government ownership affect corporate governance and corporate disclosure? Evidence from Saudi Arabia. Managerial Auditing Journal, 31(8/9), pp.871-890.
Ayuso, S., Rodríguez, M.A., García-Castro, R. and Ariño, M.A., 2014. Maximizing stakeholders’ interests: An empirical analysis of the stakeholder approach to corporate governance. Business & society, 53(3), pp.414-439.
Bazrafshan, E., Kandelousi, A.S. and Hooy, C.W., 2016. The impact of earnings management on the extent of disclosure and true financial performance: Evidence from listed firms in Hong Kong. The British Accounting Review, 48(2), pp.206-219.
Cheng, S., Lui, G. and Shum, C., 2015. Did corporate governance safeguard investor interest in the global financial crisis? Evidence from Hong Kong SAR. Asia Pacific Business Review, 21(4), pp.534-550.
Literature Review
Dias, A., Rodrigues, L.L. and Craig, R., 2017. Corporate governance effects on social responsibility disclosures. Australasian Accounting Business and Finance Journal, 11(2).
Fan, J.P., Wong, T.J. and Zhang, T., 2014. Politically Connected CEOs, Corporate Governance, and the Post?IPO Performance of China’s Partially Privatized Firms. Journal of Applied Corporate Finance, 26(3), pp.85-95.
Fung, B., 2014. The demand and need for transparency and disclosure in corporate governance. Universal Journal of Management, 2(2), pp.72-80.
Iraya, C., Mwangi, M. and Muchoki, G.W., 2015. The effect of corporate governance practices on earnings management of companies listed at the Nairobi securities exchange. European Scientific Journal, ESJ, 11(1).
Ko, H.C.A., Tong, Y.J., Zhang, F.F. and Zheng, G., 2016. Corporate governance, product market competition and managerial incentives: Evidence from four Pacific Basin countries. Pacific-Basin Finance Journal, 40, pp.491-502.
Leung, S., Richardson, G. and Jaggi, B., 2014. Corporate board and board committee independence, firm performance, and family ownership concentration: An analysis based on Hong Kong firms. Journal of Contemporary Accounting & Economics, 10(1), pp.16-31.
Lins, K.V., Servaes, H. and Tamayo, A., 2017. Social capital, trust, and firm performance: The value of corporate social responsibility during the financial crisis. The Journal of Finance, 72(4), pp.1785-1824.
Lo, K.Y. and Kwan, C.L., 2017. The effect of environmental, social, governance and sustainability initiatives on stock value–Examining market response to initiatives undertaken by listed companies. Corporate Social Responsibility and Environmental Management, 24(6),
Low, D.C., Roberts, H. and Whiting, R.H., 2015. Board gender diversity and firm performance: Empirical evidence from Hong Kong, South Korea, Malaysia and Singapore. Pacific-Basin Finance Journal, 35, pp.381-401.
Michael, B. and Goo, S.H., 2015. Corporate governance and its reform in Hong Kong: a study in comparative corporate governance. Corporate Governance, 15(4), pp.444-475.
Nguyen, T., Locke, S. and Reddy, K., 2015. Ownership concentration and corporate performance from a dynamic perspective: Does national governance quality matter?. International Review of Financial Analysis, 41, pp.148-161.
Ntim, C.G., Lindop, S., Thomas, D.A., Abdou, H. and Opong, K.K., 2017. Executive pay and performance: the moderating effect of CEO power and governance structure. The International Journal of Human Resource Management, pp.1-43.
Ortas, E., Álvarez, I., Jaussaud, J. and Garayar, A., 2015. The impact of institutional and social context on corporate environmental, social and governance performance of companies committed to voluntary corporate social responsibility initiatives. Journal of Cleaner Production, 108, pp.673-684.
Pratheepkanth, P., Hettihewa, S. and Wright, C.S., 2016. Corporate governance and financial performance: The case of Australia and Sri Lanka. Corporate Governance, 7(1), pp.1-12.
Pucheta?Martínez, M.C., Bel?Oms, I. and Olcina?Sempere, G., 2016. Corporate governance, female directors and quality of financial information. Business Ethics: A European Review, 25(4), pp.363-385.
Siddiqui, S.S., 2015. The association between corporate governance and firm performance–a meta-analysis. International Journal of Accounting and Information Management, 23(3), pp.218-237.
Singh, S., Tabassum, N., Darwish, T.K. and Batsakis, G., 2018. Corporate Governance and Tobin’s Q as a Measure of Organizational Performance. British Journal of Management, 29(1), pp.171-190.
Tang, Y., Qian, C., Chen, G. and Shen, R., 2015. How CEO hubris affects corporate social (ir) responsibility. Strategic Management Journal, 36(9), pp.1338-1357.
Usman, M., Akhter, W. and Akhtar, A., 2015. Role of board and firm performance in determination of CEO compensation: Evidence from Islamic Republic of Pakistan. Pakistan Journal of Commerce and Social Sciences, 9(2), p.641.
Wong, T.J., 2016. Corporate governance research on listed firms in China: Institutions, governance and accountability. Foundations and Trends® in Accounting, 9(4), pp.259-326.
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