Building a Corporate Governance Index from the Perspectives of Ownership and Leadership for Firms in Taiwan

11 Pages Posted: 16 Mar 2007

See all articles by Anlin Chen

Anlin Chen

National Sun Yat-sen University - Department of Business Management

Lanfeng Kao

National University of Kaohsiung - Department of Finance

Meilan Tsao

National Pingtung Institute of Commerce

Chinshun Wu

Sun Yat Sen Institute for Social Sciences and Philosophy

Abstract

This paper tests the relationship between ownership/leadership structures and stock returns for firms listed in Taiwan. A "Governance Index" is built based on four different aspects of the company's governance structure: 1. CEO duality, 2. Size of the board of directors, 3. Managements' holdings and 4. Block shareholders' holding. This index is used as a proxy measure of the effectiveness of the corporate governance mechanism. We propose that firms under good governance should outperform those under poor governance. We find a striking relationship between our governance index and stock performance of firms. The results imply that our corporate governance index is successful in evaluating the effectiveness of the governance mechanism of firms in Taiwan.

Suggested Citation

Chen, Anlin and Kao, Lanfeng and Tsao, Meilan and Wu, Chinshun, Building a Corporate Governance Index from the Perspectives of Ownership and Leadership for Firms in Taiwan. Corporate Governance: An International Review, Vol. 15, No. 2, pp. 251-261, March 2007, Available at SSRN: https://ssrn.com/abstract=972534 or http://dx.doi.org/10.1111/j.1467-8683.2007.00572.x

Anlin Chen (Contact Author)

National Sun Yat-sen University - Department of Business Management ( email )

Kaohsiung 80424
Taiwan
886-7-5252000x4656 (Phone)
886-7-5254698 (Fax)

Lanfeng Kao

National University of Kaohsiung - Department of Finance ( email )

700 Kaohsiung University Rd.
Nanzih District
Kaohsiung 803
Taiwan

Meilan Tsao

National Pingtung Institute of Commerce ( email )

51 Min Sheng E. Road
Pingtung, 900, 900
Taiwan
+886 8 7238700 (Phone)
+866 8 7238720 (Fax)

HOME PAGE: http://www.studyintaiwan.org/schools/NPIC.htm

Chinshun Wu

Sun Yat Sen Institute for Social Sciences and Philosophy

Taipei, 11529
Taiwan

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