Junket Operation, Macao’s Growing Pains or Stimulants?

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Jieqi Guan
Ming Liu


Two serious junket incidents happened in Macao in 2014 and 2015 which led to the significant drop in gross gaming revenue lasting for 27 consecutive months. Therefore, this paper intends to investigate the importance of junket operation towards gaming companies’ financial performance and also its interaction with the quality of corporate governance. This study uses regression analysis to investigate the relationships among corporate governance, financial performance, and junket promoters in Macao’s gaming industry as well as the differences between those relationships under different economic conditions. The result reflects that when economy is growing, the corporate governance quality of gaming operators shows a decreasing trend. Under the control of corporate governance, the gaming operators tend to cooperate with junket promoters in a positive manner. In contrast, without the interaction of corporate governance, the junket operation brings negative impact on casino income, especially during booming economic periods. The result is consistent with the actual commission percentage over casino revenue, corporate governance score, and EPS for gaming operators. The extant literature mainly focuses on the relationship between corporate governance and firm’s financial performance. In gaming sector, the importance of junket operation towards casino profit and its interaction with corporate governance leaves much to be explored in the related academia. This study not only fills in the research gap, but also provides constructive suggestions for Macao government to improve the gaming inspection system as well as the rules on junket operations.

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