Corporate Governance and Operating Performance - Evidence of Cathay, Mega, SinoPac Financial Holdings Companies
Date Issued
2012
Date
2012
Author(s)
Kuo, Chih-Wen
Abstract
From 2001 to 2011 sixteen financial holding companies have been established with the 2001 Financial Holding Company Act in Taiwan. They operate with big size of financial assets and funding from the banking or insurance system. Once the financial crisis breaks out, the chain reaction effect would seriously hit domestic economy. Furthermore, the financial holding company conducts the cross-industrial integration to create the synergy effect, however, it will also increase the risk of interest-conflict among sectors.
This study would explore the relationship between corporate governance and business performance with nine governance variables including the ownership structure and the composition of directors board. The sample comes from three big financial holding companies, i.e. Cathay, Mega and SinoPac Co. from 2001 to 2011. The EViews6 software is used to run the OLS regression model.
The major empirical findings are as follows:
1. The structure of ownership: (1)the directors’ shareholding ratio, the largest shareholding ratio and operating performance etc. show a significantly positive relationship with business performance, (2)the relationship between the share ratio of institutional investors and operating performance significantly shows a negative relationship.
2. The composition of directors’ board: (1)the relationship between the size of directors’ board and the EPS and ROE significantly show a negative relationship, (2)there is a insignificantly negative relationship between independent directors and operating performance.
Subjects
corporate governance
financial holding company
board size
operating performance
independent director
SDGs
Type
thesis
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