We document a positive investment premium in the Chinese market, in contrast to the typical negative investment premium in other markets. The premium only exists when we measure investment by quarterly asset growth, not annual asset growth. A positive premium can be attributed to the fact that quarterly asset growth positively predicts future profitability and GDP growth in the Chinese market, whereas both relationships are negative in the U.S. market. Furthermore, Chinese firms have shorter operating cycles compared to those in the U.S., which explains why quarter data is more valuable.

The paper, based on the samples of 2003, makes empirical analyses of China listed companies from the perspective of Chinese Corporate Governance Index ( ) and its six dimensions: the index of controlling shareholders’ behaviors, board governance index, top management governance index, information disclosure index, stakeholders’ governance index, supervisors committee governance index, and find that is positively associated with return on assets (ROA), net assets per share (NAPS), earnings per share (EPS), operating cash flow per share (OCFPS), total assets turnover (TAV), rate of total assets growth (ITA) and Z-score. These indicate that good corporate governance mechanisms improve profitability, stock expansion ability, operating efficiency, growth and development potential, as well as financial flexibility and safety of listed companies. Corporate governance mechanisms of controlling shareholders, board of directors, top management, information disclosure, stakeholders and supervisors committee are largely responsible for decision-making and decision-execution mechanisms, and furthermore, they have direct and profound effects on the performance and value of listed companies.