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1 CPS Ref: AC-1527

2 i

3 ii

4 iii

5 iv

6 v

7 vi

8 vii

9 o o o viii

10 ix

11 x

12 i xi xi

13 xii

14 a 4b 4c 4d 5a 5b 5c 6a 6b 6c a 9b 9c 10a 10b (ROE) (ROA). 180 Tobin Q. 181 (ROE) 182 (ROA) 183 xiii

15 10c 11a 11b Tobin Q xiv

16 1.1 Shleifer and Vishny, 1997 Jensen and Meckling, 1976; Fama and Jensen, 1983 ( ) ( : ) ( : ) 1

17 (Williamson, 1991; Grossman and Hart, 1986) (Shleifer and Vishny, 1997) 2

18 1.2 Agrawal and Knoeber, 1996 Klein, 1998 Cravens and Wallace, 2001 Perry,

19 1.3 4

20 Shleifer Vishny (1997) La Porta et al. (1997) 49 (La Porta et al., 1997) La Porta et al. (1998) La Porta et al., 1998, pp ) 5

21 2.3 Yafeh, 2000 Gul, 1999)Dewenter Warther (1998) La Porta et al. (1998) 6

22 (Prowse, 1996) Aoki and Patrick, 1994; Berglof and Perotti, 1994 Franks and Mayer, 2001; Gorton and Schmid, 1999 Claessens et al. (2000) ) 2, Worldscope 7

23 2.3.1 (Claessens et al., 2000) Tsui and Lynn, 2001) % (SCMP, September 2000) Tsui Gul (2000) (SCMP, 2000) Tricker(1998) 8

24 (Shleifer and Vishny, 1997)La Porta et al. (1998) (Grossman and Hart 1988)Morck et al. (1988) Klein (1998) 9

25 )

26 (SEHK, 1998) (SEHK, 1998) (HKSA, 1997b) 11

27 ( ) 3

28 2.4.5 ( First Report of the Working Group on Corporate Governance ) (HKSA, 1995) ( Second Report of the Corporate Governance Working Group ) (HKSA, 1997a) ( A Guide for the Formation of An Audit Committee ) (HKSA, 1997b) ( Directors Remuneration Recommendations for Enhanced Transparency and Accountability ) (HKSA, 1999) ( Corporate Governance Disclosure in Annual Reports A Guide to Current Requirements and Recommendations for Enhancement ) (HKSA, 2001) ( A Guide for Effective Audit Committees (HKSA, 2002) (HKSA, 1995) (HKSA, 1997a) 13

29 (HKSA, 1997b) (1997b, p.4) (HKSA, 1997b)

30 15 (HKSA, 1999)

31 (HKSA, 2002, pp.2-3) 16

32 (HKSA, 2002, pp.4-5) 5 Blue Ribbon ( Report and Recommendations of the Blue Ribbon Committee of Improving the Effectiveness of Corporate Audit Committees ) (1999) 17

33 (HKSA, 2002, p.8) (HKSA, 2002, p.16) 18

34 (HKIoD, 2000)

35 20

36 La Porta et al.,

37

38 Journal of Accounting and Economics Journal of Accounting Research The Accounting Review Journal of Financial Economics Journal of Law and Economics Corporate Governance: An International Review Journal of Financial and Quantitative Analysis Cadbury Report (December 1992) Dey Report (December 1994) Greenbury Report (July 1995) Hampel Report (January 1998) OECD Principles of Corporate Governance (April 1999) Blue Ribbon Committee Report (1999) General Motors Corporation Corporate Governance Guidelines (1994) / 23

39 The 27th Annual Board of Directors Study conducted by Korn/Ferry International (2000) Audit Committees Good Practices for Meeting Market Expectations published by PricewaterhouseCoopers (1999). The Structure of Boards at S&P 1500 Companies published by Russell Reynolds Associates & Investor Responsibilities Research Center (1999). Board Committees: Considerations, Structures and Uses in Effective Governance published by American Society of Corporate Secretaries (2000). Corporate Governance and the Board What Works Best published by PricewaterhouseCoopers (2000). CG Watch Corporate Governance in Emerging Markets published by Credit Lyonnais Securities Asia (2001). Board of Directors Global Study published by Egon Zehnder International (2000)

40 3.3.4 INED Qual : CEO : ED : NED : INED : FAM : FAM SH : AC : ACNMEM : ACNINED : ACNNED : ACMTG : TR : RC : RCNMEM : RCNINED : RCNNED : RCMTG : NC : NCNMEM : NCNINED : NCNNED : NCMTG : 25

41 Tsui and Gul (2000) 26

42 4.1 ( ) 4.2 / Report of the Committee on the Financial Aspects of Corporate Governance (Cadbury Report, 1992) Where were the Directors? Guidelines for Improved Corporate Governance in Canada (Dey Report 1994) The General Motors Corporation Corporate Governance Guidelines (GMC Guidelines, 1994) Directors Remuneration: Report of a Study Group chaired by Sir Richard Greenbury (Greenbury Report, 1995) Committee on Corporate Governance (Hampel Report, 1998) OECD Principles of Corporate Governance (OECD, 1999) Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees (Blue Ribbon Committee Report, 1999) 27

43 1980 MaxwellPollypeck BCCI (Financial Reporting Council) Sir Adrian Cadbury Cadbury Cadbury (Cadbury) Dey (Dey) Dey Dey Bosch (1995) Vienot (1995) King (1994) Peters (1997) (General Motors Corporation) 1994 (GMC 28

44 Guidelines, 1994) (CalPERS) 1995 Greenbury (Greenbury) Greenbury Calbury Hampel Cadbury Greenbury Hampel (Hampel) CadburyGreenbury Hampel (Hampel Report, 1998, para 1.14) 29

45 1999 (OECD Principles of Corporate Governance) (OECD, 1999)Blue Ribbon (Blue Ribbon Committee Report (Blue Ribbon), 1999) (1999) (Ad Hoc Task Force on Corporate Governance) Blue Ribbon ( Guidelines for Good Corporate Governance Practice ) 1 ( ) 1 ( ) 30

46 4.2.1 Cadbury Cadbury Hampel Hampel Cadbury Hampel 31

47 32 Cadbury Hampel Dey Hampel

48 4.2.3 Cadbury Hampel Cadbury Blue Ribbon Cadbury Dey 2 Blue Ribbon Blue Ribbon Blue Ribbon 2 33

49 Cadbury Blue Ribbon Dey 3 Cadbury Blue Ribbon Blue Ribbon Dey 34

50 4a 4.3 ( ) (HKSA, 1997b): ( ) 35

51 4.3.2 ( ) Gul Tsui (2000) 36

52

53 4.6 Cadbury Cadbury ( )

54 ( ) (1985)(Companies Act) (2000) (Financial Services and Markets Act) 1998 (Company Law Review Steering Group) (Department of Trade and Industry) ,

55 (Combined Code)( ) CadburyGreenburyHampel (1998) Hampel CadburyGreenbury 40

56 ( soft law ) 7 ( ) 12.43A 1 (12.43A(a)) 1 ( ) ( ) (12.43(b))

57 4.7.2 (D.1) (D.2) (D.3) (D.2) 8 42

58 (D.2.1) Cadbury Cadbury Rutteman 1994 ( Internal Control and Financial ReportingEvidence for Directors of Listed Companies in the UK ) Rutteman Turnbull (1999) Turnbull Turnbull ICAEW Turnbull (1999) o o o o o 43

59 o Rutteman (1994) D.2 o o D.3.1 D.3 Cadbury D.3.1 Cadbury D.3.2 ( ) ( ) 1997 ICAEW ( Audit Committees: A Framework for Assessment ) Cadbury Greenbury 44

60 (Cheeseman, 2000) 40% 500 (The Delaware General Corporation Law) 45

61 9 ( ) ( )(Securities and Exchange Commission) 1933 (Securities Act)1934 (Securities Exchange Act)

62 1933 / (National Association of Securities Dealers Automated Quotations -NASDAQ) / ( ) ( ) Blue Ribbon(1999) (1994) (American Law Institute) ( Principles of Corporate Governance: Analysis and Recommendations ) The Business 47

63 Roundtable (1997) ( Statement on Corporate Governance ) (CalPERS) Blue Ribbon (1999) ( ) ( 4350(d)) 10 / 10 48

64 ( ) ( 4350(d)) 4.9 (Corporations Law) (1989) (Australian Securities Commission Law) 221 (s229) (s246, s461, s1324)? (Australian Securities and Investment Commission) 49

65 1989 (Listing Rules) ( ) (Australian Institute of Company Directors) (1995) ( Code of Conduct ) (Australian Investment Manager s Association) (1997) ( Corporate Governance: A Guide for Investment Managers and Corporations and A Statement of Recommended Corporate Practice ) 50

66 (Australian Society of Certified Practising Accountants) (Business Council of Australia) (Law Council of Australia) (Institute of Chartered Accountants in Australia) (Securities Institute of Aus tralia) Henry Bosch ( Corporate Practices and Conduct )(1995)( Bosch ) (Disclosure of Corporate Governance Practices) ( ) ( ) 51

67 ( ) 1997 (Corporate Law Economic Reform Program - CLERP )( 1999 (Corporate Law Economic Reform Program Act) ( ) ( ) ( (Company Acts)) ( (1975)(Canadian Business Corporations Act ) ) 18 52

68 ( ) 11 (Civil Code) 11 Canadian Environmental Protection Act) Fisheries Act) Bankruptcy and Insolvency Act), Excise Tax Act), Canada Labour Code) (Unemp loyment Insurance Act) ( Income Tax Act) 53

69 (Canadian Securities Administrators) / 12 Dey 1994 Dey Dey Dey Dey Dey 12 (The Canadian Venture Exchange)( ) (Montreal Stock Exchange)( ) 54

70 (Canadian Institute of Chartered Accountants) (CICA et al., 2001) 474 (2) Cadbury Blue Ribbon 55

71 ( the Act ) (1965 ) (Companies Act) (1966) (Companies Regulations) (1948) (1961) (Uniform Companies Act) (1993) (Securities Commission Act) (1983) (Securities Industry Act)

72 ( ) (Report of the Finance Committee on Corporate Governance ) (Listing Requirements) 13 ( )

73 (1) ( ) (Code on Corporate Governance )() (Malaysian Institute of Accountants) 58

74 (1928) (1968) ( ) ( ) /

75 (Liu, 2001) 15 60

76 o o o o o o o o o o 61

77 (Companies Act ) (Listing Manual ) 289 (Securities Industry Act (Monetary Authority) /

78 / (Code of Corporate Governance) Yeo Koh (2001) 16 (Ministry of Finance) (Monetary Authority of Singapore) (Attorney-General s Chambers) 63

79 / / B ( ) (201B(10))201B(5) 64

80 65 4b 4c d 96% 88%

81 / 50% 4.15 Kirk Panel (1994) Cendant Corporation Sunbeam 17 ( Alchian and Demsetz, 1972; Fama and Jensen 1983) Pincus et al. (1989) ( ) Cendant Corporation Sunbeam Cendant Sunbeam Enron 66

82 ( ) (Gul, 2001, pp.36-37) Pincus et al. (1989) Collier Gregory (1999) ( ) ( ) ( ) ( ) 67

83 Deli Gillan (2000) ,150 ( ) ( ) ( ) Song Windram (2000) Cadbury (Financial Reporting Review Panel )

84 McMullen (1996) ( ) Defond Jiambalvo (1991) (The National Automated Accounting Research System)35 (Accounting Trends and Techniques) Klein (2000a) Klein 50% (Accounting Principles Board(APB) Statement No. 20, para 13)? 21 69

85 ( ) ( 50% ) Klein (2000b) ( ) 22 ( )( ) Carcello Neal (2000) ( ) ( ) ( Zmijewski s (1984) 28%) Vicknair et al. (1993)

86 Wright (1996) (Reports of the Association for Investment Management and Research Corporate Information Committee) 1989 (69 )1993 (82 ) Menon Williams (1994) 23 71

87 Beasley (1996) ( ) Peasnell et al. (2000) ( ) ,271 (1) (2)

88 (1) (2) (3)

89 74

90 5.1 SCMP, 24 September 2001, p Report of the Committee on the Financial Aspects of Corporate Governance (Cadbury Report, 1992) Directors Remuneration: Report of a Study Group chaired by Sir Richard Greenbury (Greenbury Report, 1995) Committee on Corporate Governance (Hampel Report, 1998) Where were the Directors? Guidelines for Improved Corporate Governance in Canada (Dey Report, 1994) 75

91 The General Motors Corporation Corporate Governance Guidelines (GMC Guidelines, 1994) Cadbury (Cadbury) Greenbury (Greenbury) Hampel (Hampel) Greenbury ( Hampel) 76

92 77 Greenbury Greenbury Cadbury Hampel Hampel Dey Dey Greenbury Dey

93 Cadbury Greenbury Hampel Hampel Dey Cadbury Greenbury Hampel Hampel Greenbury Dey 78

94 Cadbury Hampel 5a 5.3 Greenbury Report, 1995 (The National Association of Corporate Directors ) (2000) -Blue Ribbon ( Blue Commission on 79

95 80 Executive Compensation )

96 5.4 (Financial Times, April 8, 2002) 81

97 (D) S- K Item 402(j)) ( S-K Item 402(k)) S-K A8 o o o 82

98 83 o o 5.6 Bosch (1995)

99 9 ( ) 5.7 Dey Dey Dey

100 (2001)(Singapore Code of Corporate Governance ) c 85

101 100% 86

102 5.12 (Evans and Evans, 2001) Conyon Peck (1998) Anderson Bizjak (2000) 87

103 88 EvansEvans (2001) 5.13

104 o o o 7 Enron (401(k) ) Proctor and Gamble (94.7%) (81.5%) Pfizer (85.5%) (The Economist, 2001, December 15, p. 62)

105 Report of the Committee on the Financial Aspects of Corporate Governance (Cadbury Report, 1992) Where were the Directors? Guidelines for Improved Corporate Governance in Canada (Dey Report, 1994) The General Motors Corporation Guidelines (GMC Guidelines, 1994) Committee on Corporate Governance (Hampel Report, 1998) The Final Report of the Joint Committee on Corporate Governance (Canadian Institute of Chartered Accountants, the Toronto Stock Exchange and the Canadian Venture Exchange, 2001) Cadbury (Cadbury) 90

106 Cadbury 1 ( / ) Dey (Dey) 2 Hampel (Hampel) (1994) Dey /Cadbury ( ) Hampel ( The Final Report of the Joint Committee on Corporate Governance ) (CICA et al., 2001) 3 1 Cadbury

107 92 Dey Cadbury (1992) Hampel Hampel 6a / /

108 93 / / ( ) 6.11

109 6.4 A (1994) 3A ( ) 4 94

110 ,000 8,

111 Bosch (1995) 9 ( ) o o o ( ) ( ) 96

112 97 13,000 ( ) 6 ( Implementing a Compliance Program ) (

113 Dey Dey (2000)

114 ( ) / (15.09 ) ( ) 5/ (Practice Note) (Mandatory Accreditation Program ) ( Continuing Education Program) 1.5 5/

115 ( ) (Malaysian Institute of Corporate Governance 6 ) (Association of Chartered Certified Accountants) (ACCA Diploma in Corporate Governance) (MICG Diploma in Corporate Governance) ( 100

116 6.10 新 加 坡 規 管 架 構 新 加 坡 沒 有 法 例 或 規 管 性 質 的 規 定 要 求 公 司 設 立 提 名 委 員 會, 但 要 求 上 市 公 司 提 供 聲 明 表 示 是 否 有 依 循 新 加 坡 企 業 管 治 守 則 (2001), 或 交 代 沒 有 遵 守 的 原 因 守 則 建 議 在 新 加 坡 證 券 交 易 所 上 市 的 公 司 設 立 提 名 委 員 會 委 員 會 應 由 最 少 三 位 董 事 組 成, 大 多 數 成 員, 包 括 主 席 要 獨 立 於 公 司 設 立 提 名 委 員 會 的 目 的 是 令 委 任 董 事 的 程 序 透 明 及 評 估 董 事 會 的 效 能 提 名 委 員 會 應 以 書 面 訂 明 其 成 員 的 職 責, 並 要 每 年 披 露 成 員 名 單 (Yeo and Koh, 2001) 委 員 會 的 職 責 是 就 以 下 事 宜 向 董 事 會 提 出 意 見 : 所 有 董 事 委 任, 包 括 獨 立 董 事 長 ; 董 事 的 再 提 名 ; 獨 立 董 事 的 表 現 評 估, 特 別 注 意 他 / 她 履 行 公 司 董 事 職 務 時 的 獨 立 性 及 表 現 我 們 將 不 同 司 法 管 轄 區 對 提 名 委 員 會 的 法 例 及 規 管 性 質 規 定 進 行 比 較, 載 於 附 錄 6b 6.11 調 查 結 果 概 要 附 錄 6c 概 述 在 本 研 究 探 討 的 司 法 管 轄 區 內 進 行 的 各 項 調 查 結 果 大 多 數 調 查 的 對 象 是 整 體 的 企 業 管 治 措 施, 而 非 單 獨 針 對 提 名 委 員 會 有 一 點 必 須 注 意 的 是, 各 項 調 查 所 涉 及 的 範 圍 並 不 相 同 ; 故 此, 在 各 司 法 管 轄 區 進 行 的 調 查, 所 得 的 資 料 不 一 定 可 互 相 比 較 101

117 74% 1% 6.12 Evans Evans (2001)

118 6.13 Dey ( ) ( The Final Report of the Joint Committee on Corporate Governance ) (CICA et al., 2001) Dey / 103

119 ( ) 60% / ( ) 6.13 / /

120 ( )

121 7.2.2 ( ) ( ) Blue Ribbon ( ) ( ) 106

122 ( ) ( ) ( )

123 10% 80% ( ) ( ) ( )

124 % ( 32 ) ( 7 ) / 109

125 59% 38% 3% ( 7.1) 7.1 3% 38% 59% % 71% 19% 10% ( 7.2) 110

126 7.2 19% 10% 71% % 55% 24% 21% ( 7.3) 111

127 7.3 24% 21% 55% ( 7 ) % 30%25% (50% ) ( 7.4) 112

128 7.4 30% 45% 30% 50% 25% / 113

129 % Tsui and Gul (2000) 114

130 % (342) ( 7.5) % 60% % ( ) (86%) ( 7.6) 115

131 % 3% 7% 3% 0% % ( 286 ) ( %) (71%) (24%) 5% ( ) 64% (28 18 ) ( %)29% ( %)7% (1998 0%) 116

132 342 89% % ( ) % 117

133 (1998 ) % 118

134 1999 (60%) (342 ) (7% ) % 1% ( ) ( ) ( ) ( ) ( (ROE) (ROA)Tobin Q 119

135 ( ) Tobin Q ( ) 9a 9c ( Tobin Q ) 6 Tobin Q (Tsui and Lynn, 2001)

136 10a 10c / Gul (2002) Gul (see Gul, 1999; Gul and Tsui, 1998; 2001) 8 8 = x x ( Gul and Tsui, 1998 Gul, 2001) 121

137 Gul (2002) a 11b Carcello et al. (2000) ( )

138 Gul (2002) 1999 ( ) Gul (2002) Dalton et al. (1998) (273) Gul (2002) ( )

139 124 ( ) ( )

140 125

141

142 (Gul, 2002)

143 128 ( ) ( )

144

145 130 ( ) ( ) ( ) 8.2.2

146 ( ) 8.3 / 131

147 Agrawal, A. and C. R. Knoeber Firm performance and mechanisms to control agency problems between managers and shareholders. Journal of Financial and Quantitative Analysis (September): Alchian, A. A. and H. Demsetz Production, information costs and economic organization. American Economic Review 62(5): American Law Institute (ALI) Principles of Corporate Governance: Analysis and Recommendations. American Law Institute Publishers, St Paul s: Minnesota. American Society of Corporate Secretary Board Committees: Considerations, Structures and Uses in Effective Governance. American Society of Corporate Secretary (March), American Society of Corporate Secretary. Anderson, R. C. and J. M. Bizjak An empirical examination of the role of the CEO and the compensation committee in structuring executive pay. Working paper, American University. Aoki, M. and H. Patrick The Japanese Main Bank System: Its Relevance for Developing and Transforming Economies. Oxford University Press, Oxford. Australian Corporate Law Economic Reform Program Act Australian Corporations Law Australian Institute of Company Directors (AICD) Code of Conduct. AICD. Australian Investment Manager s Association (AIMA) Corporate Governance: A Guide for Investment Managers and A Statement of Recommended Corporate Practice, AIMA. Beasley, M. S An empirical analysis of the relation between the board of director composition and financial statement fraud. Accounting Review 71(4): Berglof, E. and E. Perotti The governance structure of the Japanese financial keiretsu. Journal of Financial Economics 36(2): Blue Ribbon Committee Report Report and Recommendations of the Blue Committee on Improving the Effectiveness of Corporate Audit Committees. The New York Exchange and The National Association of Securities Dealers. Bosch Report Corporate Practices and Conduct. Working Group representing Australian Institute of Company Directors, Australian Society of Certified Practicing Accountants, Business Council of Australia, The Institute of Chartered Accountants in Australia & The Securities Institute of Australia. The Business Roundtable Statement on Corporate Governance. 132

148 Cadbury Report Report of the Committee on the Financial Aspects of Corporate Governance. Gee: London. Canadian Institute of Chartered Accountants (CICA), the Toronto Stock Exchange (TSE) and the Canadian Venture Exchange (CVE) The Final Report of the Joint Committee on Corporate Governance. CICA, TSE and CVE. Canadian Business Corporate Act (CBCA) Carcello, J. V. and T. L. Neal Audit committee composition and auditor reporting. The Accounting Review 75(4): Cheeseman, H, R Contemporary Business Law. Prentice Hall. p. 2. Claessens, S., S. Djankov and L. H. P. Lang The separation of ownership and control in East Asian corporations. Journal of Financial Economics 58(1-2): Collier, P. and A. Gregory Research Note: Audit committee activity and agency costs. Journal of Accounting and Public Policy 18: The Conference Board Top Executive Compensation: Canada, France, the United Kingdom and the United States. The Conference Board Director s Compensation and Board Practices in The Conference Board. Conyon, M. J. and S. I. Peck Board control, remuneration committees, and top management compensation. Academy of Management Journal 41(2): Cravens, K. S. and W. A. Wallace A framework for determining the influence of the corporate board of directors in accounting studies. Corporate Governance 9(1): Credit Lyonnais Securities Asia (CLSA) Emerging Market CG Watch: Corporate Governance in Emerging Markets (April). Research & Sales Offices, CLSA Ltd. Dalton, D. R., C. M. Daily, A. E. Ellstrand and J. L. Johnson Meta-analytic reviews of board composition, leadership structure, and financial performance. Strategic Management Journal 19: DeFond, M. L. and J. Jiambalvo Incidence and circumstances of accounting errors. Accounting Review 66(3): Deli, D. N. and S. L. Gillan On the demand for independent and active audit committees. Journal of Corporate Finance 6: Dey Report Where were the directors? Guidelines for Improved Corporate Governance in Canada. Toronto Stock Exchange Commission on Corporate Governance in Canada. 133

149 The Economist December 15, p. 62 Egon Zehnder International Board of Directors Global Study, Egon Zehnder International. Ernst & Young (Australia) Corporate Governance Survey. Ernst & Young. Evans, R. and J. Evans The influence of non-executive directors control and rewards on CEO remuneration: Australia evidence. Working paper, Curtin University of Technology. Fama, E. F. and M. C. Jensen Separation of ownership and control. Journal of Law and Economics 26 (June): Financial Times International report highlights failings in Europe s governance movement (April 8). Franks, J. and C. Mayer Ownership and control of German corporations. Review of Financial Studies 14(4): General Motors Corporation (revised periodically). Corporate Governance Guidelines. guidelines.html. Gorton, G. and F. Schmid Universal banking and the performance of German firms. Journal of Financial Economics 43. Greenbury Report Directors Remuneration Report of a Study Group Chaired by Sir Richard Greenbury (July 17). Grossman, S. J. and O. D. Hart The costs and benefits of ownership: A theory of vertical and lateral integration. Journal of Political Economy 94(4): Grossman, S. J. and O. D. Hart One share-one vote and the market for corporate control. Journal of Financial Economics 20: Gul, F. A Capital structure and dividend policies in Japan. Journal of Corporate Finance 5(Spring): Gul, F. A Hong Kong Auditing: Economic Theory and Practice. City University of Hong Kong Press. Hong Kong. Gul, F. A Audit committee variables and audit fee. Working paper, City University of Hong Kong. Gul, F. A. and J. Tsui Free cash flow, debt monitoring and audit pricing: Further evidence on the role of director equity ownership. Auditing: A Journal of Practice and Theory 20(2):

150 Gul, F. A. and J. Tsui A test of the free cash flow and debt monitoring hypotheses: evidence from audit pricing. Journal of Accounting and Economics 24(2): Hampel Report Committee on Corporate Governance - Final Report (January). Hong Kong Institute of Directors (HKID) Guide for Independent Non- Executive Directors (July), HKID Ltd. Hong Kong Monetary Authority (HKMA) Corporate governance of locally incorporated authorized institutions. Supervisory Pending Manual, CG-1 (September). Hong Kong Society of Accountants (HKSA) First Report of the Working Group on Corporate Governance. HKSA. Hong Kong Society of Accountants (HKSA). 1997a. Second Report of the Corporate Governance Working Group (January), HKSA. Hong Kong Society of Accountants (HKSA). 1997b. A Guide for the Formation of An Audit Committee (December), HKSA. Hong Kong Society of Accountants (HKSA) Directors Remuneration- Recommendations for Enhanced Transparency and Accountability. HKSA. Hong Kong Society of Accountants (HKSA) Corporate Governance Disclosure In Annual Reports A Guide to Current Requirements and Recommendations for Enhancement. HKSA. Hong Kong Society of Accountants (HKSA) A Guide for Effective Audit Committees. HKSA. Jensen, M. C. and W. H. Meckling Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics 3 (October): Kirk Panel Strengthening the Professionalism of the Independent Auditor. Stanford, CT: Public Oversight Board. Klein, A Affiliated directors: Puppets of management or effective directors? Working paper, New York University. Klein, A. 2000a. Causes and consequences of variations in audit committee composition. Working paper, New York University. Klein, A. 2000b. Audit committee, board of director characteristics, and earnings management. Working paper, New York University. Kom/Ferry International European Boards of Directors Study Kom/Ferry International. 135

151 Kom/Ferry International Boards of Directors Study in Australia and New Zealand Kom/Ferry International Korn/Ferry International th Annual Board of Directors Study. Korn/Ferry International. Korn/Ferry International th Annual Board of Directors Study. Korn/Ferry International. Korn/Ferry International th Annual Board of Directors Study. Korn/Ferry International. La Porta, R., F. Lopez-de-Silanes, A. Shleifer and R. W. Vishny Legal determinants of external finance. Journal of Finance 52: La Porta, R., F. Lopez-de-Silanes, A. Shleifer and R. W. Vishny Law and finance. Journal of Political Economy 106(6): Liu, L. S A Perspective on corporate governance in Taiwan. Asia Business Law Review 31 (January). Malaysian Code of Corporate Governance Finance Committee on Corporate Governance, Malaysia (March). Malaysian Securities Commission Act Malaysian Securities Industry Act McMullen, D. A Audit committee performance: An investigation of the consequences associated with audit committees. A Journal of Practice and Theory 15(1): Menon, K. and J. D. Williams The use of audit committees for monitoring. Journal of Accounting Public Policy 13: Morck, R., A. Shleifer and R. Vishny Management ownership and market valuation : An empirical analysis. Journal of Financial Economics 20: National Association of Corporate Directors (NACD) Blue Ribbon Commission on Executive Compensation. NACD. OECD OECD Principles of Corporate Governance. Task Force on Corporate Governance (April), HKSA. OECD/World Bank/ADB A comparative review of board committees in Asia. Third Asian Roundtable on the Role of Boards and Stakeholders in Corporate Governance Pacific Economic Cooperation Council Guidelines for Good Corporate Governance Practice. 136

152 Patrick Callaghan & Associates and Korn/Ferry International Corporate Board Governance and Director Compensation in Canada A Review of Peasnell, K. V., P. F. Pope and S. Young Board monitoring and earnings management: Do outside directors influence abnormal accruals? Working paper, Lancaster University. Perry, T Incentive compensation for outside directors and CEO turnover. Working paper, Arizona State University. Pincus, K. M. Rusbarsky and J. Wong Voluntary formation of corporate audit committees among NASDAQ firms. Journal of Accounting and Public Policy 8: PricewaterhouseCoopers and Kuala Lumpur Stock Exchanges Corporate Governance: 1998 Survey of Public Listed Companies. PricewaterhouseCoopers Malaysia Board of Directors: a Survey on Remuneration and Practice PricewaterhouseCoopers. PricewaterhouseCoopers Audit Committees - Good Practices for Meeting Market Expectations (May), PricewaterhouseCoopers. PricewaterhouseCoopers Corporate Governance and the Board - What Works Best. PricewaterhouseCoopers. Prowse, S Institutional investment patterns and corporate financial behavior in the United States and Japan. Journal of Financial Economics 27: Russell Reynolds Associates & IRRC The Structure of Boards at S&P 1500 Companies (January), Russell Reynolds Associate & IRRC. Russell Reynolds Associates and the Investor Responsibility Research Centre The structure and compensation of boards of directors of U.S. public companies Board Practice Survey. Russell Reynolds Associates & IRRC. The Rutteman Guidance Internal Control and Financial Reporting: Evidence for Directors of Listed Companies Registered in the UK. Institute of Chartered Accountants in England and Wales (ICAEW). Shleifer A. and R. Vishny A survey of corporate governance. Journal of Finance 5 (June): Singapore Code of Corporate Governance Corporate Governance Committee, Singapore (March). Singapore Institute of Directors/Egon Zehnder International Singapore Board of Directors Survey Song, J. and B. Windram Benchmarking audit committee effectiveness in the UK. Working paper, Napier University. 137

153 South China Morning Post (SCMP) Directors paid lavishly despite slim pickings for minorities. Business Post (September 24), p. 1. South China Morning Post (SCMP) Family control and the Asian crisis. Business Post (September 20). Stock Exchange of Hong Kong (SEHK) Code of Best Practice. Listing Rules, Volume 2, Appendix 14. SEHK. Taiwan Company Law Taiwan Securities and Exchange Law Toronto Stock Exchange and Institute of Corporate Directors Report on Corporate Governance Tricker, B Editorial: The role of institutional investor in corporate governance. Corporate Governance 6 (4): Tsui, J. and F. A. Gul Corporate governance and financial transparencies in the Hong Kong Special Administrative Region of the People s Republic of China. Second Asian Roundtable on Corporate Governance, Organization for Economic Co-operation and Development, Tsui, J. and S. Lynn Family control, CEO dominance and firm performance in Hong Kong. Working paper, City University of Hong Kong. Turnbull Report Internal Control: Guidance for Directors on the Combined Code. Institute of Chartered Accountants in England and Wales (September). UK Combined Code The Combined Code: Principles of Good Governance and Code of Best Practice. London Stock Exchange Committee on Corporate governance (June). UK Companies Act UK Financial Services and Markets Act US Securities Act US Securities Exchange Act Vafeas, N The determinants of compensation committee membership. Corporate Governance 8 (4): Vicknair, D., K. Hickman and K. C. Carnes A Note on audit committee independence: Evidence from the NYSE on Grey area directors. Accounting Horizons 7(1): Williamson, O., The logic of economic organization. In Williamson & Winter eds., The Nature of the Firm Origins, Evolution, and Development. Oxford University Press: New York. 138

154 Wright, D. W Evidence on the relation between corporate governance characteristics and the quality of financial reporting. Working paper, University of Michigan. Yafeh, Y Corporate governance in Japan: Past performance and future prospects. Oxford Review of Economic Policy 16 (2): Yeo, V. and P. Koh The role of boards and stakeholders in corporate governance. The Third Asian Roundtable on Corporate Governance, Singapore (April). Zmijewski, M.E Methodological issues related to the estimation of financial distress prediction models. Journal of Accounting Research 22 (Supplement):

155 (Asian Corporate Governance Association) 1 (Accounting Standards Board ) 2 ( Financial Reporting Council) 3 (Financial Services Authority, Listing Authority) 1 (The Conference Board, Global Corporate Governance Research Center) 2 (National Association of Corporate Directors) 3 (United States Securities and Exchange Commission) 4 Korn/Ferry (Korn/Ferry International ) 1 (Australian Stock Exchange) 2 (Australian Institute of Company Directors ) 3 (CPA Australia) 4 ( The Treasury, Corporate Governance and Accounting Policy Division) 1 ( Kuala Lumpur Stock Exchange) 2 (Malaysian Institute of Corporate Governance) :

156 2 - I A

157 2 () B

158 2 () C

159 2 () II? A. : / ? B. :

160 2 () C. : / D. : E. : F. :

161 3 ( Cadbury

162 3 () 9. a. b. c. (i.) (ii.) (iii.) (iv.) (v.) (vi.) d. ( ) e. f. g. ( ) h. i

163 4a Cadbury Greenbury Hampel Blue Ribbon Dey (1992) (1995) (1998) (1999) (1994) (1994) AC AC AC AC 2 AC (i) AC (ii) AC AC AC AC NEDs NEDs AC AC: NED: : 1. Greenbury

164 4a () Cadbury Greenbury Hampel Blue Ribbon Dey (1992) (1995) (1998) (1994) (1999) (1994) AC

165 4a () Cadbury (1992) Blue Ribbon (1999) Dey (1994) 3.4 AC AC AC AC AC AC. 3.5Greenbury (1995) AC AC. 4. Blue Ribbon (1999) AC AC AC

166 151 4b (Company Act)201 (Canadian Business Corporations Act ) [NYSE NASD 4350(d)] KLSE (Listing Rule )15.10 (1) NED NED

167 4b () / ( ) ( ) 14(14) NED ( ) A 2 1 S1.D.3.1 NED NED NYSE NASD Reg. S-K / ( ) S-K KLSE 152

168 4c 1. LR LR LR LR LR AC HKSA 2. ( ) ( ( ) NED (LR) - -NED NED - INED INED INED ) - NED INED (LR/CCG) INED HKSA - NED - (CCG) INED NED INED AC LR CCG ( ) BPG ( ) HKSA 153

169 4c () 3. -INED (-INED -INED ( - ) 1. ) -INED 4. AC (HKSA). 5. ( ) - AC (HKSA) AC (HKSA) (BPG) (CCG) - NED INED AC LR CCG ( ) BPG ( ) HKSA 154

170 4c () HKSA 2001 LR BPG CCG LR LR LR CBCA LR - - / ( ) 155

171 4d Korn/Ferry International Board of Directors Study in Ernst & Young: Corporate Governance Survey Australia and New Zealand 2000 Patrick Callaghan & Associates and Korn/Ferry International: Corporate Board Governance and Director Compensation in Canada A Review of 2000 Toronto Stock Exchange and Institute of Corporate Directors: Report on Corporate Governance N/A N/A N/A N/A : N/A N/A N/A 51% 100% N/A 100% 100% 5 N/A N/A N/A 4 N/A N/A N/A NED 3 N/A N/A N/A NED N/A N/A N/A N/A N/A 45% N/A N/A NED N/A N/A N/A 69% N/A: 156

172 4d () PricewaterhouseCoopers/ KLSE Corporate Governance: 1998 Survey of Public Listed Companies PricewaterhouseCoopers Malaysia Board of Directors: A Survey on Remuneration and Practices 2001 Singapore Institute of Directors/Egon Zehnder International Singapore Board of Directors Survey OECD/World Bank/ADB: Third Asian Roundtable on the Role of Boards and Stakeholders in Corporate Governance: A Comparative Review of Board Committees in Asia 2001 OECD/World Bank/ADB: Third Asian Roundtable on the Role of Boards and Stakeholders in Corporate Governance: A Comparative Review of Board Committees in Asia N/A N/A N/A N/A : 42% N/A N/A 26% N/A 100% 100% 100% 100% 100% >2 4 N/A N/A N/A N/A N/A NED N/A N/A N/A 3 N/A NED N/A 100% N/A N/A N/A N/A N/A N/A N/A N/A NED N/A N/A 78% N/A 79% N/A:

173 4d () 68% 60% N/A N/A N/A 65% ED86% INED 25% INED N/A: 158

174 4d () Korn/Ferry International European Board of Directors Study 1998 Korn/Ferry International 26 th Annual Board of Directors Study Korn/Ferry International 27 th Annual Board of Directors Study Korn/Ferry International 28 th Annual Board of Directors Study The Conference Board Director s Compensation and Board Practices in 2000 Russell Reynolds Associates and the Investor Responsibility Research Center Board Practices Survey The Structure and Compensation of Boards of Directors of US Public Companies ( ,139 /1202 ) /754 N/A Super Composite 1500 N/A N/A N/A N/A. N/A N/A N/A N/A N/A : N/A N/A N/A N/A N/A N/A 88% 100% 100% 100% 96% 100% N/A N/A N/A N/A N/A NED N/A N/A N/A N/A N/A N/A NED N/A N/A N/A N/A N/A N/A INED N/A N/A N/A N/A N/A 50% NED N/A N/A N/A N/A N/A 85% N/A: 159

175 5a Cadbury (1992) Greenbury (1995) Hampel (1998) (1994) 1. ( 2 3) RC RC RC 1 2. RC RC NEDs RC RC NEDs NED RC: NED: : Dey RC RC RC RC

176 5a () Cadbury Greenbury (1995) Hampel (1992) (1998) (1994) 3. RC RC RC Articles of Association) NED NED RC RC RC RC

177 5b 1., HKMA RC CCG MCCG CC INED NED - INED NED (MCCG) INED (LR) (CCG) (LR) -INED (CCG) --- -INED ( (CCG) INED) RC NED INED CCG ( ) MCCG LR HKMA SEC (USA) CC 162

178 5b () SEC (LR) - RC : RC (HKMA) - (LR/MCCG) (CCG) (LR) HKMA LR LR LR LR ( ) RC NED INED CCG ( ) MCCG LR HKMA SEC (USA) CC 163

179 5c Korn/Ferry International Board of Directors Study in Australia and New Ernst & Young: Corporate Governance Survey Zealand 2000 Patrick Callaghan & Associates and Korn/Ferry International: Corporate Board Governance and Director Compensation in Canda A Review of 2000 The Conference Board: Top Executive Compensation: Canada, France, the United Kingdom and the United States % 15% N/A N/A N/A : N/A N/A N/A 51% 80% 69% 93% N/A 4 N/A N/A N/A N/A N/A NED 3 N/A N/A N/A NED N/A N/A N/A N/A NED N/A 96% N/A N/A NED N/A 57% N/A N/A N/A: 164

180 5c () 50% 60% 2/3 87%1998 ED NED 87% 26% 85% 9% 8% 95% 165

181 6a Cadbury (1992) Hampel (1998) (1994) Dey (1994) 1. NC NC NC 2. NC --- NC NED NED 3. NED NC NC NC: NED: : 166

182 6b 1. CCG MCCG HKMA NC (LR) NC (LR) NED NED - NEDs (LR) (NED) (HKMA) NED (LR) - INED - INED (CCG) (MCCG) (INED) (LR) INED (LR) -INED (CCG) NED (LR) (HKMA) NC NC (LR) - (LR) NC NED INED CCG ( ) MCCG LR HKMA 167

183 6b () HKMA LR LR LR ( )( ) Company Manual) ( ) 168

184 6c Country Korn/Ferry International Board of Directors Study in Australia and New Zealand 2000 Ernst & Young: Corporate Governance Survey 169 Patrick Callaghan & Associates and Korn/Ferry International: Corporate Board Governance and Director Compensation in Canada A Review of 2000 Toronto Stock Exchange and Institute of Corporate Directors: Report on Corporate Governance data N/A N/A N/A N/A : N/A N/A N/A 51% 33% 32% 26% (65% 33% ) 2 N/A N/A N/A N/A 3-5 NED 3 N/A N/A N/A NED N/A N/A N/A N/A NED N/A 91% N/A N/A NED N/A 64% N/A >66% 24% NED N/A N/A 23% 22% 19% (40%) (33%) N/A:

185 6c () PricewaterhouseCoopers Malaysia Board of Directors: A Survey on Remuneration and Practices 2001 Singapore Institute of Directors/Egon Zehnder International Singapore Board of Directors Survey 2000 OECD/World Bank/ADB: Third Asian Roundtable on the Role of Boards and Stakeholders in Corporate Governance: A Comparative Review of Board Committees in Asia 2001 OECD/World Bank/ADB: Third Asian Roundtable on the Role of Boards and Stakeholders in Corporate Governance: A Comparative Review of Board Committees in Asia N/A N/A N/A N/A : N/A N/A 26% N/A 15% 1% 7% 4% 2 N/A N/A N/A N/A 3 N/A 5 NED N/A N/A N/A N/A NED 100% N/A N/A N/A NED 100% N/A N/A N/A 50% N/A 70% 52% ED 48% NED 30% ED NED (6%) N/A: 170

186 6c () Korn/Ferry International European Board of Directors Study 1998 Korn/Ferry International 26 th Annual Board of Directors Study Korn/Ferry International 27 th Annual Board of Directors Study Korn/Ferry International 28 th Annual Board of Directors Study The Conference Board Director s Compensation and Board Practices in 2000 Russell Reynolds Associates and the Investor Responsibility Research Center Board Practices Survey The Structure and Compensation of Boards of Directors of US Public Companies ( ,139 /1202 ) /754 N/A Super Composite 1500 N/A N/A N/A N/A. N/A N/A N/A N/A N/A : N/A N/A N/A N/A N/A N/A 54% 74% 74% 73% 46% 67% N/A N/A N/A N/A N/A NED N/A N/A N/A NED N/A N/A N/A N/A N/A N/A INED N/A N/A N/A N/A N/A 40% INED N/A N/A N/A N/A N/A 88% N/A: 171

187 6c () 82% ED 72% 10% 10% NED N/A NED NED / NED ( 5.5 ) ( 5.5 ) 77% 77% ( 63% ( 55% ) ( 62% ) ( ) ) ( 33% 27% ) ( 65% 35%) 10% NED ( 5.5 ) 77% ( ) N/A N/A: 172

188 7 I D. (5 = )

189 7 () E. (5 = )

190 7 () F. (5 = )

191 7 () II? A. (5 = ) / 3.71 B. (5 = )

192 7 () C. (5 = ) / D. (5 = ) E. (5 = ) F. (5 = )

193 8 ( ) Franklin Warren McFARLAN Leslie BOYD ( ) 178

194 9a (ROE) (N = 408) ROE = a + b 1 AC + b 2 CR + b 3 MBRATIO + b 4 DE + b 5 LAT + b 6 FC + b 7 INDUSTRY + e INTERCEPT AC CR MBRATIO DE LAT FC PROPERTY TRANSPORT ELECTRONIC CONSTRUCTION DISTRIBUTORS ENGINEERING HOUSEHOLD FINANCE T *** 2.18** *** -4.90*** 7.51*** ** * F *** Adj R *** p<0.01 ** p<0.05 * p< t ( ) 179

195 9b (ROA) (N = 408) ROA = a + b 1 AC + b 2 CR + b 3 MBRATIO + b 4 DE + b 5 LAT + b 6 FC + b 7 INDUSTRY + e INTERCEPT AC CR MBRATIO DE LAT FC PROPERTY TRANSPORT ELECTRONIC CONSTRUCTION DISTRIBUTORS ENGINEERING HOUSEHOLD FINANCE T *** 1.36* *** -5.72*** 8.62*** 1.29* -1.87** * F *** Adj R *** p<0.01 ** p<0.05 * p< t ( ) 180

196 9c Tobin Q (N = 408) Tobin Q = a + b 1 AC + b 2 CR + b 3 MBRATIO + b 4 DE + b 5 LAT + b 6 FC + b 7 INDUSTRY + e T- INTERCEPT AC CR MBRATIO DE LAT FC PROPERTY TRANSPORT ELECTRONIC CONSTRUCTION DISTRIBUTORS ENGINEERING HOUSEHOLD FINANCE * * 24.43*** *** -2.31*** -1.58* ** ** F *** Adj R *** p<0.01 ** p<0.05 * p< t ( ) 181

197 10a (ROE) (N=220) ROE = a + b 1 INED_DUM + b 2 LNACNMEM + b 3 CR + b 4 MBRATIO + b 5 DE + b 6 LAT + b 7 FC + b 8 INDUSTRY + e INTERCEPT INED_DUM LNACNMEM CR MBRATIO DE LAT FC PROPERTY TRANSPORT ELECTRONIC CONSTRUCTION DISTRIBUTORS ENGINEERING HOUSEHOLD FINANCE T *** 1.37* 3.23*** 2.39*** -6.74*** -5.24*** 6.92*** * * F *** Adj R *** p<0.01 ** p<0.05 * p< t ( ) 182

198 10b (ROA) (N=220) ROA = a + b 1 INED_DUM + b 2 LNACNMEM + b 3 CR + b 4 MBRATIO + b 5 DE + b 6 LAT + b 7 FC + b 8 INDUSTRY + e INTERCEPT INED_DUM LNACNMEM CR MBRATIO DE LAT FC PROPERTY TRANSPORT ELECTRONIC CONSTRUCTION DISTRIBUTORS ENGINEERING HOUSEHOLD FINANCE T *** 1.39* 3.17*** 2.23** -4.44*** -5.85*** 6.53*** 1.41* ** -1.62* F- 8.54*** Adj R *** p<0.01 ** p<0.05 * p< t ( ) 183

199 10c Tobin Q (N=220) Tobin s Q = a + b 1 INED_DUM + b 2 LNACNMEM + b 3 CR + b 4 MBRATIO + b 5 DE + b 6 LAT + b 7 FC + b 8 INDUSTRY + e INTERCEPT INED_DUM LNACNMEM CR MBRATIO DE LAT FC PROPERTY TRANSPORT ELECTRONIC CONSTRUCTION DISTRIBUTORS ENGINEERING HOUSEHOLD FINANCE T ** 1.56* 19.84*** *** -2.34*** *** *** F *** Adj R *** p<0.01 ** p<0.05 * p< t ( ) 184

200 11a (N = 355) = a + b 1 LAT + b 2 SUB + b 3 CR + b 4 DE + b 5 ROA + b 6 FOREIGN + b 7 OPIN + b 8 YE + b 9 BIG5 + b 10 AC + b 11 BOD_SIZE + b 12 CEOCHAIR + b 13 P_INED+ e T- INTERCEPT LAT SUB CR DE ROA FOREIGN OPIN YE BIG5 AC BOD_SIZE CEOCHAIR P_INED *** 7.21*** 5.73*** -1.92** ** * -1.47* 1.32* F *** Adj R *** p<0.01 ** p<0.05 * p< t ( ) 185

201 11b (N = 188) = a + b 1 LAT + b 2 SUB + b 3 CR + b 4 DE + b 5 ROA + b 6 FOREIGN + b 7 OPIN + b 8 YE + B 9 BIG5 + b 10 LNACNMEM + b 11 INED_DUM + b 12 CEOCHAIR + b 13 BOD_SIZE + + b 14 P_INED+ e T- INTERCEPT LAT SUB CR DE ROA FOREIGN OPIN YE BIG5 LNACNMEM INED_DUM CEOCHAIR BOD_SIZE P_INED *** 5.08*** 5.25*** -1.58* * ** F *** Adj R *** p<0.01 ** p<0.05 * p< t ( ) 186

202 : AC INED_DUM LNACNMEM ROE ROA Tobin s Q CR DE FC LAT MBRATIO AUDFEE SUB FOREIGN OPIN YE BIG 5 BOD_SIZE CEOCHAIR P_INED 1 = 0 1 = 50% 0 ( ), (Tsui and Lynn, 2001), 1 = 0, 1 = , 1 = 0, 1 = 0 187

203 PROPERTY FINANCE TRANSPORT ELECTRONIC, 1 = 0, 1 = 0, 1 = 0, 1 = 0 CONSTRUCTION, 1 = 0 DISTRIBUTORS ENGINEERING HOUSEHOLD, 1 = 0, 1 = 0, 1 = 0 188