The Impacts of Corporate Governance Mechanisms and Ownership Structure on Firm Performance: A Case Study of Chinese Dual-Listed Companies


  • Wing-Kwong CHAN Graduate school of business, University Sains Malaysia
  • Ei-Yet CHU Graduate school of business, University Sains Malaysia



cross-listing, firm performance, corporate governance, ownership structure, agency theory, legal bonding, board structure


Purpose: This study examines the impactive effects of both corporate governance mechanisms and ownership structure on the firm performance of Chinese dual-listed companies which form a specific class of cross-listed companies having core business in China and list their shares in both the China A-share market and the Hong Kong market simultaneously.

Design/Methodology/Approach: Huber White’s Robust method in the LS technique is employed in this study to examine the impacts of corporate governance mechanisms and ownership structure on firm performance of Chinese dual-listed companies. To do so, we select 100 Chinese dual-listed companies consisting of 941 firm-year observations from 2003 to 2019 in our study, use both ROA and ROE to proxy the firm performance, and introduce a state control firm attribute, a binary variable representing ownership rights plus manipulation rights of China government, in the regression model to compare its effects on firm performance with that of state ownership.

Findings: In our paper, we find that the independent variable having significant associations with both ROA and ROE in the same sign significantly influences the firm performance of Chinese dual-listed companies. The regression results show that both the independent director ratio and board size worsen the firm performance in terms of both ROE and ROA, respectively, but they do not contribute to the mitigation of agency costs or the improvement of firm performance. However, we do not observe any legal bonding effects on the firm performance in this study. On the other hand, we find that contrary to the consensus of CEO duality’s negative effects on firm performance in literature, CEO duality positively influences the firm performance in terms of both ROA and ROE. Besides, foreign ownership is found to be positively related to firm performance in terms of ROA only, while state ownership is found to insignificantly and negatively influences firm performance. However, the state control firm attribute, representing the ownership rights and manipulation rights of China government, positively influences the firm performance in terms of both ROA and ROE. Thus, we conclude that the CEO duality and the state control firm attribute are the two determinant factors that positively influence Chinese dual-listed companies' firm performance. China’s domestic private ownership significantly and positively associates with ROE, while the firm size exhibits a significant and positive influence on the firm performance in terms of both ROA and ROE. In contrast, the influence of the leverage ratio on firm performance is negative and is opposite to that of firm size, the financial firm attribute negatively relates to ROA, and no significant influence on firm performance is found in stock return volatility.

Originality/Value: The research results complement the prior papers related to the fields of cross-listing and firm performance in literature. The findings in our paper are useful for investors to evaluate the firm performance of Chinese dual-listed companies, and for policymakers to enhance the listing rules and laws to ensure Chinese companies’ independent directors and other board members act diligently to improve the firm performance.


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How to Cite

CHAN, W.-K., & CHU, E.-Y. (2023). The Impacts of Corporate Governance Mechanisms and Ownership Structure on Firm Performance: A Case Study of Chinese Dual-Listed Companies. Advances in Decision Sciences, 26(4), 98–126.