Is Corporate Governance in China Related to Performance Persistence?

Lars Helge Haß, Sofia Johan, Denis Schweizer

Journal of Business Ethics · 2016 · Volume 134 · Issue 4

Abstract

This paper examines the relationship between performance persistence and corporate governance (as proxied for by board characteristics and shareholder structure). We document systematic differences in performance persistence across listed companies in China during 2001–2011, and empirically demonstrate that firms with better corporate governance show higher performance persistence. The results are robust over both theshortandlong terms. We also find that performance persistence is an important factor in refinancing, and it can lower companies’ costs of borrowing. Overall, our findings offer important implications for business ethics, as we demonstrate how corporate governance can lower companies’ costs of debt.

Keywords

Board structure, China, Corporate governance, Performance persistence

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