THE STUDY OF RELATIONSHIPS AMONG OFFICE LOCATIONS, CORPORATE GOVERNANCE AND BUSINESS PERFORMANCE: EVIDENCE FROM CHINA LISTED COMPANIES

Year 2017, Volume: 4 Issue: 4, 447 - 459, 30.12.2017

Shih-Yao Lin Ai-Chi Hsu

https://doi.org/10.17261/Pressacademia.2017.753

Abstract

Purpose - Based on Tobler’s first law of
geography, this paper applies the concept on friction of distance, and assumes
that business performance and corporate governance are interrelated with the
locations where the according businesses site their headquarter offices. Methodology -  A Differencing Location Factor survey was
designed and used to examine the impacts within. The author first use a  multiple regression to analyze Business
Performance, then the single-factor and multivariate analysis of variance for
Corporate Governance, and the Principal component analysis for comparing the
quality of Corporate Governance.  

Findings- As per empirical results: 1) Corporate business performance
significantly correlates with corporate governance and office locations, with a
significant difference between various areas; and 2) For
enterprises in China , the quality of corporate governance significantly
correlates and varies with their office locations.

Conclusion- Regarding these
results the office location is one of the factors that affect corporate
governance and business performance. This also explains the United States,
China and Taiwan scholars research that the headquarters office has a tendency
to move towards the metropoliscentral in time trajectory.

Keywords

: Corporate governance, business performance, location theory, multiple regression, multivariate analysis of variance, Principal component analysis

References

• An-Lin Chen., Yi-Kai Chen & Lan-Fen Gao. 2013, “ Study of Equity Pledge by Directors and Supervisors and Corporate Governance”, Sun Yatsen Management Review, vol. 21, no. 1, pp. 299-337.
• Cheng-En Ke, 2000, “ Problems and Suggestions for Improvement Regarding Taiwan's Corporate Supervision System”, Accounting Research Monthly, vol. 173, no. 1, pp. 75-81.
• Claessens, S., S. Djankov. & L. Lang. 2000, “The separation of ownership and control in East Asia corporations”, Journal of Financial Economics, vol. 58, pp. 81-112.
• Dalton, D.R. & Kesner, I. F. 1987, “Composition and CEO Duality in Boards of Directors : An International Perspectiv”, Journal of International Business Studies, vol. 18, pp. 33−42.
• Dimmick, J. & Rothenbuhler, E. 1984, “ The Theory of the Niche: Quantifying Competition Among Media Industries”, Journal of Communication, vol. 34, no. 1, pp. 103-119.
• Epps, R.W. & Cereola, S.J. 2008, “Do Institutional Shareholder Services (ISS) Corporate Governance Ratings Reflect a Company's Operating Performance?” Critical Perspectives on Accounting, vol. 19, no. 8, pp. 1135 - 1148.
• Ertugrul, M. & Hedge, S. 2009, “Corporate Governance Ratings and Firm Performance,” Financial Management, vol. 38, no. 1, pp. 139-160.
• Fama.F.E. 1980, “Agency Problems and the Theory of the Firm,” Journal of Political Economy, vol. 88, no. 2, pp. 288-307.
• Holloway, S.R. & Wheeler, J.O. 1991, “Corporate Headquarters Relocation and Changes in Metropolitan Corporate Dominance, 1980-1987”, Economic Geography, pp. 67.
• Huson, M. K., P. H. Malatesta. & R. Parrino. 2004, “Managerial Succession and Firm Performance,” Journal of Financial Economics, vol. 74, no. 2, pp. 237-275.
• Jhao-Lan Wang, Yi-Jhong Syu, & Wei-Chu Syu. 2008, “Evaluation of Efficiency and Productivity of Local Governments in Taiwan”, Public Administration & Policy, vol. 84, pp. 71-120.
• Jhu-San Wang, Ya-Syue Jhuang, & Jin-Fu Guo. 2009, “Correlation between Corporate Governance, Investment and Corporate Value”, Soochow Journal of Economics and Business, vol. 66, pp. 69-114.
• Klapper, L.F. & Love, I. 2004, “Corporate Governance, Investor Protection, and Performance in Emerging Markets”, Journal of Corporate Finance, vol. 10, no. 5, pp. 703-728.
• Liang-Jie Sie. 2013, “A Study of Entrepreneurial Performance of Micro Enterprises around Neihu Science Park”, Master's thesis of the Institute of Business Administration in the private China University of Technology.
• Ming-Yi Huang, & Jin-E Jhang. 2000, “Location Selection for the Enterprise Headquarters in Different Sectors”, Chinese Society of Housing Studies, Collected Papers of the 9th Annual Meeting, pp. 477-491.
• OECD. 2015, OECD Principles of Corporate Governance. Retrieved from http://www.oecd.org/corporate/. Piv, G. 1993, “A Taxonomy Of Suburban Office Clusters: The Case Of Toronto,” Urban Studies, vol. 30, pp. 31-49.
• Rajan, R.G. & Zingales, L. 1998, “Which Capitalism? Lessons From the East Asian Crisis”, Journal of Applied Corporate Finance, vol. 11, no. 3, pp. 40-48.
• Rubin, P. 1978, “The theory of the firm and the structure of the franchise contract”, Journal of Law and Economics, vol. 21, pp. 222-233.
• Ruei-Jhao Deng, Huei-Cin Wu. & Guo-Siou Huang. 2008, ” A Discussion of Population and Employment from a Perspective of Regional Economy: Empirical Analysis of Taiwan's Urban and Rural Areas”, Chinese Journal of Management, vol. 3, no. 9, pp. 69-85.
• Siao-Lin Yang. 2012, ” The Influence of Geographical Locations upon the Quality of Board of Directors”, Master's thesis of the Institute of Finance in the National Yunlin University of Science and Technology.
• Shleifer, A. & Vishny, R. 1997, “ The Limits of Arbitrage”, Journal of Finance, vol. 52, pp. 35–55.
• Shleifer, A. & Vishny, R. 1986, ”Large Shareholders and Corporate Control”, Journal of Political Economy, vol. 94, no. 3, pp. 461-488.
• Shilton, L. & C. Stanley. 1999, “Spatial Patterns of Headquarters”, Journal of Real Estate Research, vol. 17, no.3 , pp. 341-364.
• Veliyath, R. 1995, “Top Management Compensation and Shareholder Returns: Unravelling Different Models of the Relationship”, Journal of Management Studies, vol. 36, pp. 23-143.
• Weber, A. 1909, “Theory of the Location of Industries”, Translated by Friedrich C. J. (1929). Chicago: University of Chicago Press.
• Wei-Jhou Hu. 2006, “Economic Geography”, Taipei: Soochow University Press.
• Yin-Hua Ye, Cun-Siou Li, & Cheng-En Ke. 2002, “Corporate Governance and Rating System”, Taipei: Business Brain.
• Yin-Hua Ye. 2015, “Corporate Governance: Case and Analysis Mode”, Taichung: Tsang Hai Publishing House.