Since 1989, Taiwan has begun implementing the policy of privatizing its government-owned enterprises and had a significant effect. However, in around seven enterprises such as Chunghwa Telecom, Taiwan Cooperative Bank, Bank of Kaohsiung and Yang Ming Marine, the government still accounts for more than half of the board seats or supervisors of each enterprise. The government exercises indirect control over the decision making equate has domination of privatized enterprises. In addition, non-performance by directors and supervisors representing government shares has resulted in scandals in Taiwan Fertilizer, Taiwan Development, etc. The listed companies in Taiwan from 2006 to 2009 are sampled for this study to explore the association between corporate governance and operating performance of the privatized state-owned enterprises.
The main results shows privatization of government control over the business with the board of directors on business performance have a negative impact. However. The government has less than half seats in board has significant growth in EBIT, but ROA and EPS were not significantly improved. The firm has high level in board structure also show significant growth in EBIT and ROA.
