hkiod corporate governance scorecard project
DESCRIPTION
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. Research Committee. Coordinator - PowerPoint PPT PresentationTRANSCRIPT
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HKIoD Corporate Governance Scorecard Project
Sponsored by :
Corporate Governance Development Foundation
Executed by :
CityU's research team led by Prof Stephen Cheung,Professor (Chair) of Finance
Organized by:
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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)
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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
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Surveyed Companies I (as at 12/2005)
Air china (753) CHALCO (2600) China Power (2380) CITIC Resources (1205)
Allied Group (373)Chen Hsong Hldgs (57)
China Res Land (1109) CKI Hldgs (1038)
Angang Newsteel (347)
Cheung Kong (1)China Res Logic (1193)
CLP Hldgs (2)
Anhui Conch (914) China COSCO (1919)China Res Power (836)
CNAC (1110)
ASM Pacific (522) China East Air (670) China Resources (291) CNOOC (883)
Bank of E Asia (23)China EB Ltd (165) China Shenhua (1088)
CNPC (Hong Kong) (135)
Bankcomm (3328) China Insurance (966) China Ship Dev(1138) COFCO Int’l (506)
Beijing Airport (694) China Life (2628) China South Air (1055) COSCO Pacific (1199)
Beijing Ent (392) China Mer Hldgs (144) China Telecom (728) CR Peoplesphone (331)
BOC Hong Kong (2388)
China Mobile (941) China Travel (308) CSCL (2866)
Brilliance Ent (1114) China Netcom (906) China Unicom (762) Dan sing (440)
BYD Co (1211)China Oilfield (2883) Chinese Est H (127)
Dan Sing Banking (2356)
Café de Coral H (341) China Oversea (688) CIFH (183) Datang Power (991)
Cathay Pac Air (293) China Pharma (1093) CITIC Pacific (267) Denway Motors (203)
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Surveyed Companies II (as at 12/2005)
Dynasty Wines (828) GZI Transport (1052) Huadian Power (1071) K. Wah Int'l (173)
Esprit Holdings (330) HAECO (44) Huaneng Power (902) Kerry Ppt (683)
FE Consort Int’l (35) Hang Lung Group (10) Hutch Harb Ring (715) Kingway Brew (124)
FIH (2038) Hang Lung Ppt (101) Hutch Telecom (2332) Kowloon Dev (34)
First Pacific (142) Hang Seng Bank (11) Hutchison (13) LCH Bank (1111)
Fong's Ind (641) Henderson Inv (97) Hysan Dev (14) Lenovo Group (992)
Fountain Set (420) Henderson Land (12) i-Cable Comm (1097) Li & Fung (494)
Fubon BK (HK) (636) HK & China Gas (3) ICBC (Asia) (349) Lifestyle Int’l (1212)
Giordano Int'l (709) HK&S Hotels (45) IDT Int'l (167) Liu Chong Hing (194)
Glorious Sun (393) HK Electric (6) JCG Holdings (626) Luen Thai (311)
Great Eagle H (41) HK Ferry (Hldgs) (50) Jiangsu Express (177) Maanshan Iron (323)
Guangdong Inv (270) HKEx (388) Jiangxi Copper (358) Melco Int’l Dev (200)
Guangshen Rail (525) HKR Int'l (480) Johnson Elec H (179) Miramar Hotel (71)
Guangzhou Inv (123) Hopewell Hold (54) K M Bus Hold (62) MTR Corporation (66)
Guoco Group (53) HSBC Holdings (5) K Wah Cons (27) New World Dev (17)
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Surveyed Companies III(as at 12/2005)
Next Media (282) Shanghai Ind H (363) Solomon Systech (2878) Vitasoy Int'l (345)
NWS Hldgs (659) Shanghai Pechem (338) Swire Pacific A (19) Vtech Holdings (303)
OOIL (316) Shangri-la Asia (69) Swire Pacific B (87) Weiqiao Textile (2698)
Oriental Press (18)Shenzhen Express (548)
TCL Int'l Hold (1070) Wharf Holdings (4)
Pac Century Ins (65) Shenzhen Int'l (152) Techtronic Ind (669) Wheelock (20)
Pacific Basic (2343) Shenzhen Invest (604) Texwinca Hold (321) Wheelock Prop (49)
PCCW (8) SHK Ppt (16) Tianjin Dev (882) Wing Hang Bank (302)
PCPD (432) Shui On Cons (983) Titan Petrochem (1192) Wing Lung Bank (96)
PetroChina (857) Shun Tak Hold (242) TPV Technology (903) Yanzhou Coal (1171)
PICC P&C (2328) Singamas Cont (716) Travelsky Tech (696) Yizheng Chem (1033)
Ping An (2318) Sino Hotel (1221) Truly Int'l (732) Yue Yuen Ind (551)
Regal Int’l (78) Sino Land (83) Tsingtao Brew (168) Zhejiang Express (576)
SaSa Int'l (178) Sinopec Corp (386) TVB (511) Zijin Mining (2899)
SCMP Group (583) Sinotrans (598) Varitronix Intl (710)
SH Electric (2727) Smartone Tele (315) Vedan Int’l (2317)
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Objectives of Corporate Scorecard for Hong Kong Listed Companies
Encourage adoption of best practiceof corporate governance in Hong Kong through a systematic evaluation of current practices
Define a methodology/ framework to assess corporate governancepractices in Hong Kong
Develop specific criteria and a measurement tool to evaluate individual companies
Set up processes to evaluate corporate governance of Hong Kongcompanies on an annual basis
Our objective
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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
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Consistency
• Each company was rated by two different research assistants
• The overall results were cross-checked by the research team
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Scorecard Followed The Five OECD Corporate Governance Principle
OECD principle
Number of questions & sub-questions
A. Rights of shareholders
22
B. Equity of shareholders
13
C. Role of stakeholders
9
D. Disclosure and transparency
32
E. Board responsibilities
45
121
• OECD is internationally recognized
• HKEx guidelines comprehensively covered
• 174 public companies surveyed
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Positive Correlation between Corporate Governance Index and Company Valuation
Correlation=0.05, Significant at 1% level
Mar
ket
to B
oo
k R
atio
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Market Valuation by Corporate Governance Score Quartile
2005 Market to Book Ratio vs CGI Ranking
Mar
ket
to B
oo
k R
atio
13
Improvement of CGI by Sections
Section/ Year 2005 Mean 2002 Mean
A 71.47 53.42
B 71.01 75.90
C 40.21 54.32
D 89.47 62.34
E 69.50 45.81
CGI 70.87 61.02
CGI increase by percentage 16.14%
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Improvement of CGI Compared with 2002
Improvement Frequency
-6-0 10
0-5 23
5-10 40
10-15 36
15-20 18
>20 6
Improvement of CGI compared with 2002
10
23
40
36
18
6
0
5
10
15
20
25
30
35
40
45
-6~0 0~5 5~10 10~15 15~20 >20
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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 )
Weak
Strong
50
55
60
65
70
75
80
85
90
95
Sco
res
All HSCCIHSCEI
HSI
HSHKCI
Range
Mean
Weak
Strong
50
55
60
65
70
75
80
85
90
95
Sco
res
All HSCCIHSCEI
HSI
HSHKCI
Range
Mean
Weak
Strong
Weak
Strong
50
55
60
65
70
75
80
85
90
95
Sco
res
All HSCCIHSCEI
HSI
HSHKCI
Range
Mean
50
55
60
65
70
75
80
85
90
95
Sco
res
All HSCCIHSCEI
HSI
HSHKCI
Range
Mean
16
Corporate Governance Performance by Industries
50
55
60
65
70
75
80
85
90
95
Sco
res
Range
Mean
IndustrialAll Properties Finance Utilities ConsolidatedEnterprises
Hotel &Miscellaneous
Weak
Strong
50
55
60
65
70
75
80
85
90
95
Sco
res
Range
Mean
IndustrialAll Properties Finance Utilities ConsolidatedEnterprises
Hotel &Miscellaneous
Weak
Strong
Weak
Strong
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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 )
0
10
20
30
40
50
60
70
80
90
100
Sco
res
All A B
C
D
E
RangeMean
0
10
20
30
40
50
60
70
80
90
100
Sco
res
All A B
C
D
E
RangeMean
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A. 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
49.19
71.47
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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
51.61
71.01
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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
40.21
8.1
95.71
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
72.71
89.47
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
31.18
69.50
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Results
• NOT finger-pointing exercise
• Important input for policy-makers, companies, and the public
• Score for individual companies will not be made public
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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)
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