The study is aimed at investigating the relationship between Corporate Governance (CG) disclosure and financial performance of both Hong Kong-based and China-based family-controlled property development companies listed on the Hong Kong Stock Exchange. Ten leading companies with the largest market capitalization are studied in each category. Evaluation of the quality of CG disclosure is conducted through a checklist of mandatory and recommended disclosures developed with reference to the Appendices 14, 23 and 16 of Hong Kong Listing Rules about CG disclosure and financial information, the Best Practice Guidance of CG disclosure provided by Hong Kong Institute of Certified Public Accountants (formerly Hong Kong Society of Accountants), and the information about the specific performance evaluation indicator in the property development companies. It is found that there is a positive relationship between CG disclosure and financial performance in Hong Kong-based companies, especially operating profit margin and net profit margin. This study provides evidence to support the relationship between CG disclosure and financial performance.

In Hong Kong, the new code on Corporate Governance (CG) applies to all companies listed on the Hong Kong Stock Exchange (SEHK), starting from January 1, 2005. It lists out the mandatory disclosure requirements and criteria of good CG with code provisions, and recommends best practices for the listed companies (HKex, 2005).

Referring to this new code, this study investigates the relationship between CG disclosure and family-controlled companies' financial performance. Hong Kong-based and China-based family-controlled property development companies listed on the SEHK, are studied. The samples chosen from Hong Kong-based property companies are Cheung Kong (Holdings) Ltd. (Cheung Kong), Hang Lung Group Ltd. (Hang Lung), Henderson Land Development Co. Ltd. (Henderson), New World Development Co. Ltd. (New World), Sun Hung Kai Properties Ltd. (Sun Hung Kai), Wharf (Holdings) Ltd. (Wharf), Great Eagle Holdings Ltd. (Great Eagle), Hopewell Holdings Ltd. (Hopewell), Sino Land Co. Ltd. (Sino Land), and Hysan Development Co. Ltd. (Hysan). China-based property companies are Agile Property Holdings Ltd. (Agile), China Resources Land Ltd. (China Resources Land), Guangzhou R&F Properties Co. Ltd. (Guangzhou R&F), China Overseas Land and Investment Ltd. (China Overseas), Hopson Development Holdings Ltd. (Hopson), Guangzhou Investment Co. Ltd. (Guangzhou Inv.), Sinolink Worldwide Holdings Ltd. (Sinolink), SRE Group Ltd. (SRE), NEO-China Land Group (Holdings) Ltd. (NEO-China Land), and New World China Land Ltd. (New World China). These are the leading property development companies listed in Hong Kong which have the largest market capitalization in the property industry (Bank of China (Hong Kong), 2008).

Corporate Governance Journal, Corporate Governance, CG, Hong Kong Stock Exchange, SEHK, Henderson Land Development Co. Ltd., New World Development Co. Ltd., Asian Financial Crisis, Corporate Ownership, Operating Profit Margin, OPM, Financial Ratios, Disclosure of Financial Information, Enron Corporation, WorldCom Corporation, Guangzhou Investment Co. Ltd., Cheung Kong Ltd.