A Study of Corporate Governance Practices in Financial Sector

Annie Hin-cheung Ko, Feida Zhang, and Stella So

This study aims to examine (1) the strengths and weaknesses of the financial sector in terms of governance practices; and (2) the governance compliance level of the sector in Hong Kong. A rating instrument is designed to test four major governance areas: ‘Board Responsibilities’, ‘Disclosure and Transparency’, ‘Equitable Treatment of Shareholders’, and ‘Role of Stakeholders’. Results show that companies perform best in ‘Role of Stakeholders’ and worst in ‘Disclosure and Transparency’. The total corporate governance score of the sector has improved by almost twofold during 2003 to 2017. However, it is disappointing to see that most of the companies barely meet the merest requirements specified by the regulators; only a few of them allot resources to support good governance voluntarily. According to the literature review, this is the first over-a-decade-long longitudinal research to study the trends of the corporate governance performance of the financial sector.