Exploring the impact of binarized corporate governance attribute scores on firm performance in China: A comprehensive analysis

This study investigates the impact of binarized corporate governance (CG) scores on firm performance in China, measured by return on equity (ROE). Analyzing 928 observations from 116 companies across sectors like manufacturing, information technology, and wholesale (2010–2017), the research employs the ordinary least squares (OLS)Newey–West regression model to evaluate eight CG attributes. Findings reveal that board independence, chief executive officer duality, and board meeting attendance negatively affect ROE, while auditor independence, board diversity, and committee independence enhance performance. The binarized scoring method, which categorizes governance attributes dichotomously, simplifies evaluation and provides clearer insights into governance mechanisms’ financial impacts. Higher CG scores promote fairness, accountability, and transparency, fostering long-term success. Integrating agency, stakeholder, and resource-dependency theories, the study highlights how robust governance practices improve financial performance and shareholder returns. The findings emphasize the need for policy makers to strengthen CG standards in China’s regulatory framework, offering actionable insights for enhancing competitiveness and sustainability. This research contributes to the literature by introducing a novel methodological approach and underscoring the importance of comprehensive CG frameworks in achieving profitability.