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HKIoD Corporate Governance Scorecard Project

HKIoD Corporate Governance Scorecard Project

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HKIoD Corporate Governance Scorecard Project

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  1. HKIoD Corporate Governance Scorecard Project Organized by: Sponsored by : Corporate Governance Development Foundation Executed by : CityU's research team led by Prof Stephen Cheung, Professor (Chair) of Finance

  2. Research Committee • Coordinator • Prof. Stephen Y L Cheung (City University of Hong Kong) • Members • Dr. J. Thomas Connelly (Chulalongkorn University) • Dr. Piman Limpaphayom (Chulalongkorn University) • Ms. Ping Jiang (City University of Hong Kong) • Research Assistants • Mr. Andy Lau (City University of Hong Kong) • Mr. Chung Cheong Wing (City University of Hong Kong) • Mr. Ho Ka Ho (City University of Hong Kong) • Ms. Jan Chan (City University of Hong Kong) • Ms. Louise Zhang (City University of Hong Kong) • Mr. Patrick Tsang (City University of Hong Kong)

  3. Research Methodologies I • Survey results based on publicly available information • HSI, HSHKCI, HSCCI, and HSCEI constituent stocks • Based on information disclosed in 2005 • 174 major companies are covered

  4. Surveyed Companies I (as at 12/2005)

  5. Surveyed Companies II (as at 12/2005)

  6. Surveyed Companies III(as at 12/2005)

  7. Objectives of Corporate Scorecard for Hong Kong Listed Companies Our objective

  8. Research Methodologies II • Avoids subjectivity bias • Not dependent on companies’ willingness • Written request was sent to individual companies. Only a few companies supplied us with full information

  9. Consistency • Each company was rated by two different research assistants • The overall results were cross-checked by the research team

  10. Scorecard Followed The Five OECD Corporate Governance Principle • OECD is internationally recognized • HKEx guidelines comprehensively covered • 174 public companies surveyed

  11. Correlation=0.05, Significant at 1% level Positive Correlation between Corporate Governance Index and Company Valuation Market to Book Ratio

  12. Market Valuation by Corporate Governance Score Quartile 2005 Market to Book Ratio vs CGI Ranking Market to Book Ratio

  13. Improvement of CGI by Sections

  14. Improvement of CGI Compared with 2002

  15. Corporate Governance Performance by Indices HSCCI (恒生香港中資企業指數) HSCEI (恒生中國企業指數) HSI (恒生指數) HSHKCI (恒生香港綜合指數)

  16. Corporate Governance Performance by Industries

  17. Corporate Governance Performance by Categories A: Rights of Shareholders (股東的權利) B: Equitable Treatment of Shareholders (對股東的公平待遇) C: Role of Stakeholders in Corporate Governance (利益關係團體在公司治理中扮演的角色) D: Disclosure and Transparency (公開與透明度) E: Board Responsibilities (董事會的責任)

  18. Rights of Shareholders (股東的權利) Improvements: • Improve the quality of Notice to Call for Shareholders Meeting • Attendance of all Board members, Esp. Board Committee Chairs 92.63 71.47 49.19

  19. B. Equitable Treatment of Shareholders(對股東的公平待遇 ) Improvements: • Increase influence of minority shareholders to the Board • To use cumulative voting in the election of board members • To facilitate voting by proxy 95.16 71.01 51.61

  20. C. Role of Stakeholders in Corporate Governance(利益關係團體在公司治理中扮演的角色) Improvements: • Disclose more details on the role of supplier/business partner • Give more details on the environmental issues in its public communication 95.71 40.21 8.1

  21. D.Disclosure and Transparency(公開與透明化 ) Improvements: • The information in website’s • Shareholding structure • Organizational structure • To disclose the management’s shareholding • Communication with public • Analyst briefing (s) • Press conference (s)/ press briefing 98.77 89.47 72.71

  22. E. Board Responsibilities(董事會的責任 ) Improvements: • Separate the role of the chairman and CEO • A set of writing the code of ethics • Setting up the Nomination Committee • Role and responsibilities • Performance and meeting 98.99 69.50 31.18

  23. Results • NOT finger-pointing exercise • Important input for policy-makers, companies, and the public • Score for individual companies will not be made public

  24. Top 10 Highest CGI Scored Companies(by alphabetical order) • BOC Hong Kong (2388) • CLP Hldgs (2) • HKEX(388) • HSBC Hldgs (5) • Hang Seng Bank (11) • Hysan Development (14) • Li & Fung (494) • MTR Corporation (66) • Shenzhen Express (548) • Solomon Systech (2878)

  25. ~ END ~