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Hong Kong's financial sector is popular within the banking
industry for the range of services it provides and the service
providers themselves. Using the case study approach, this
paper explores the changes to the Boards of Directors and
governance issues of the 12 listed banks on the Hong Kong
Stock Exchange over a three-year period. It focuses on issues
such as the number of directors on the boards, their qualifications,
type of directors in terms of independence, outside directorships
held, and the auditors of the financial statements from
2004 to 2006. Through the use of archival data over a three-year
period, this paper finds that the overall listed banks in
Hong Kong exhibit good corporate governance, and that this
governance has in fact improved in quality over the years.
The three-year comparison demonstrates that the high level
of corporate governance exhibited by the 12 listed banks
in Hong Kong from 2004 to 2006 provides a possible explanation
to the success of the region as a significant international
financial center due to the factors such as absence of duality
of CEO and chairman, use of the Big Four audit firms, qualifications
of directors, and use of independent non-executive directors
on the boards.
Hong Kong is an important international financial center,
and one way in which it can maintain an orderly commercial
environment is through corporate governance. In view of
the special roles that banks play in economies, it is especially
prudent that listed banks demonstrate good corporate governance
to enhance the business setting. This paper explores the
current corporate governance initiatives in the backdrop
of the Stock Exchange of Hong Kong (2004), over a three-year
period, i.e., 2004 - when the code was just a draft; 2005
- when it became law in 2005; and 2006 - the first year
of its implementation.
The Hong Kong Monetary authority as of February 2006, reported
that there were 137 Licensed Banks, 30 Restricted Licensed
Banks, 32 Deposit-Taking companies and 85 Representative
Offices of Foreign Banks. For the quarter ended September
2006, banks employed 81,619 persons in Hong Kong.The Hong Kong Trade Development Council (HKTDC, 2007) reported
that 76 of the world banks exists in Hong Kong and that
it is the second largest loan syndication center in Asia
and Asia's third largest international banking sector. Hong
Kong is now the sixth largest foreign exchange center, and
is known for its `high standards of market transparency,
disclosure and prudently supervised financial institutions'
(HKTDC 2007, p. 1). These statistics confirm the importance
of Hong Kong as a financial center and the importance of
its banking industry.
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