2016 HKIoD Corporate Governance Score-card: Corporate Governance Level of Hong Kong-Listed Companies Improving Steadily
Still room for improvement for the newly-listed and new index constituents
HONG KONG, Feb 14, 2017 - (ACN Newswire) - The Hong Kong Institute of Directors ("HKIoD") has today announced the results of the "2016 HKIoD Corporate Governance Score-card". The surveyed sample consisted of 120 firms versus 121 in the last survey in 2012. The survey also corresponded to the OECD Principles of Corporate Governance (2015 edition) to include new areas of assessment, such as risk management structure and functions, CSR reporting timeliness and quality, and structure of the corporate governance committee, reflecting corporate governance development that took place in the past few years and latest requirement. Comparing the two latest score-cards, excluding the new areas of assessment, the mean CGI score of sample companies in the 2016 survey improved by 5.1%. However, when it comes to the new assessment areas, the sample companies' performance appeared stagnant. The survey found, worthy of notice, room for improvement in corporate governance among companies newly listed and new constituents of indices in the past four years. That pointed to the need for company directors to stay up to speed with corporate governance developments and gain new knowledge so that they may drive the sustainable and professional development of the corporation that they serve.
The regularly updated HKIoD Corporate Governance Score-card survey aims to document and evaluate corporate governance practices of the most representative of listed companies in Hong Kong, thereby helping Hong Kong-listed companies, policy makers and regulators to identify ways to improve corporate governance practices. The 2016 HKIoD Corporate Governance Score-card survey, sponsored by the Corporate Governance Development Foundation Fund, was conducted by a research team of the Centre for Corporate Governance and Financial Policy of Hong Kong Baptist University and with Prof Stephen YL Cheung (President, The Education University of Hong Kong) as advisor.
The criteria of the survey were based on OECD Principles of Corporate Governance and the Corporate Governance Code of the Hong Kong Exchanges and Clearing Limited ("HKEX"). The 120 Hong Kong-listed firms were evaluated on five aspects: (1) Rights of shareholders; (2) Equitable treatment of shareholders; (3) Role of stakeholders: (4) Disclosure and transparency, and (5) Board responsibilities. The companies surveyed were constituents of the Hang Seng Index ("HSI"), Hang Seng HK Large Cap Index ("HSLI"), Hang Seng China-Affiliated Corporation Index ("HSCCI"), and Hang Seng China Enterprise Index ("HSCEI"). The survey findings were based on analyses of data of those companies published in 2015-2016.
Some of the findings are below:
HSI constituents performed the best among constituents of all four market indices
Hang Seng Index (HSI): 74.69
Hang Seng China Enterprise Index (HSCEI): 72.77
Hang Seng HK Large Cap Index (HSLI): 72.14
Hang Seng China-Affiliated Corporation Index (HSCCI): 70.45
The energy sector leads the pack by industry
Information Technology: 72.77
The 10 Companies with the Highest CGI Scores (in the order of stock code)
CLP Holdings (2) HSBC Holdings (5)
Hang Seng Bank (11) MTR Corporation (66)
HKEX (388) CNOOC (883)
Lenovo Group (992) China Shenhua (1088)
COSCO Ship Port (1199) AAC Tech (2018)
Mr. David Graham, Chief Regulatory Officer and Head of Listing of HKEX, said, "We congratulate HKIoD on the publication of its "Corporate Governance Score-card 2016", which helps the market gain a better understanding of the progress Hong Kong's listed companies have made in respect of their corporate governance practices, as well as areas that require improvement. Whilst it is particularly encouraging to see that, compared with a similar survey conducted four years ago, most companies have shown improvements in their corporate governance standards, it is important that HKEX continues to promote good corporate governance amongst its listed companies. This year, HKEX, with HKIoD's support, is launching a new directors' training programme which seeks to enhance the quality of directors and the effectiveness of boards."
Mr Henry Lai, Chairman of HKIoD, said, "Promoting good corporate governance is the mission of HKIoD as good corporate governance is of utmost importance to the success of a company as well as the sustainable growth of the economy and competitiveness of Hong Kong as an international financial centre. Thus, HKIoD regularly examines and monitors major listed companies in Hong Kong and issues the Corporate Governance Score-card as a way to help develop a better system to assess local corporate governance standard. The score-card results can help companies, policy makers and the public to identify practical ways to improve corporate governance. This latest score-card is the fifth published by HKIoD and it was held in 2016 instead of 2015 to accommodate OECD changes. To our encouragement, the survey found Hong Kong-listed companies managing to continue to improve in corporate governance standards. We hope Hong Kong-listed companies can keep up their good work and HKIoD will spare no effort in assisting directors in their push to adopt best corporate governance practices in their corporations."
Professor Stephen Cheung, President of The Education University of Hong Kong, who led the survey, said, "Good corporate governance is not static, but a process constantly evolving. A company cannot stop at meeting existing requirements, because new requirements based on international best practices and experience are continually surfacing and being promoted. This latest survey, for example, asked 30% more questions than the last. We found that, just using the same criteria as in the 2012 survey, the corporate governance standard of the surveyed companies improved on average, but when evaluated based on the updated standards, the companies had not made any advancement. Hence, it is important for Hong Kong-listed companies to take corporate governance more seriously and pay attention to the latest developments in good corporate governance practices."
Dr Carlye Tsui, CEO of HKIoD, said, "By organising the Corporate Governance Score-card, HKIoD aims to encourage corporations to keep enhancing their corporate governance practices and push for greater transparency in disclosure, thereby boosting stakeholders' confidence in the company's corporate governance performance. We also hope directors of companies would pay attention to the message behind the scores and use the Corporate Governance Index as reference to measure the corporate governance practices of their respective companies, helping to put in place better practices and hence raise the value of the company. As a facilitator of corporate governance and director professionalism, HKIoD organises over 100 courses of director training every year, with the scope covering rules and regulations, as well as strategies, culture and practices. We will heed the topics and recommendations in the latest score-card in updating relevant educational and training programmes for directors."
About The Hong Kong Institute of Directors
The Hong Kong Institute of Directors is Hong Kong's premier body representing directors to foster the long-term success of companies through advocacy and standards-setting in corporate governance and professional development for directors. A non-profit-distributing organisation with membership consisting of directors from listed and non-listed companies, HKIoD is committed to providing directors with educational programmes and information service and establishing an influential voice in representing directors. With international perspectives and a multi-cultural environment, HKIoD conducts business in biliteracy and trilingualism.
To order the full report: http://www.hkiod.com/scorecard.html
About Centre for Corporate Governance & Financial Policy at Hong Kong Baptist University
The mission of this cross-disciplinary research centre is to improve the quality of public debates and policies on major corporate governance and related financial policy issues, and to promote best practice in the area. It aspires to be a centre of excellence on corporate governance studies in the region.
The Hong Kong Institute of Directors
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Source: The Hong Kong Institute of Directors
Sectors: Daily Finance, Daily News
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