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HKIoD Corporate Governance Scorecard Project

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Title: HKIoD Corporate Governance Scorecard Project


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
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 (??????????) HSCEI (????????) HSI (????)
HSHKCI (????????)
16
Corporate Governance Performance by Industries
17
Corporate Governance Performance by Categories
A Rights of Shareholders (?????) B Equitable
Treatment of Shareholders (????????) C Role of
Stakeholders in Corporate Governance
(?????????????????) D Disclosure and
Transparency (??????) E Board Responsibilities
(??????)
18
Rights of Shareholders (?????)
  • 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(???????? )
  • 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(?????????????????)
  • 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(?????? )
  • Improvements
  • The information in websites
  • Shareholding structure
  • Organizational structure
  • To disclose the managements shareholding
  • Communication with public
  • Analyst briefing (s)
  • Press conference (s)/ press briefing

98.77
89.47
72.71
22
E. Board Responsibilities(?????? )
  • 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
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