ABSTRACT Purpose — Effective corporate governance system plays an important role in preventing frauds and protecting resources effectively in organization, especially in listed companies. The lack of research and application in Chinese listed companies motivate this study. The purpose of this paper is based on the foreign exchange contracts issue of the CITIC Pacific, to examine the corporate governance structure and propose recommendations for CITIC Pacific and other Chinese listed companies in the future. Design/methodology/approach— 32 experienced professionals of Big 4 audit fim auditors are interviewed to summarize the ideas of how to maintain an efficient corporate governance system. Findings -- Results of the study show that effective corporate governance should avoid the board of directors to become the family board or the buddy board. Second, in Chinese listed companies, more attention should be paid in the audit committee in order to maintain corporate governance. Further, most respondents think that the top management is profit-oriented and cares less about ethics, this tone at the top may lead employees to be unethical and affect corporate governance. Results also support that the complexity of financial products becomes a challenge for external auditors to ensure corporate governance effectiveness. Finally, most of the respondents believe that the internal audit in China is still developing and have a long way to go. They suggest that the culture of high punishment on ethical issues and enhancing communications between employees and managers may help to establish an effective corporate governance system. Originality/value- Companies need to design and implement an effective system of corporate governance. The study would be advantageous for Chinese listed companies in HK and other markets to reconsider how they can implement better in corporate governance in the future, reduce the risk of harming benefits of shareholders and protect the resources.