Is Corporate Governance in China Related to Performance Persistence?

This paper examines the relationship between performance persistence and
corporate governance (proxied by board characteristics and shareholder
structure). We document systematic differences in performance persistence
across listed companies in China during 2001-2011, and empirically
demonstrate that firms with higher corporate governance (especially for
board characteristics) show higher performance persistence. The results are
stronger for short horizons and for an accounting-based view. Overall, our
empirical findings, although not being able to completely exclude other
explanations, strongly suggest that a well-structured board with more
independent directors, split positions for CEOs and the chairman as well as
smaller boards favors performance persistence. In terms of the shareholder
structure we find evidence that lower levels of State ownership and a nonconcentrated blockholder structure is positively associated with performance
persistence.