An overview of corporate governance in China

Elston, Frank (2010) An overview of corporate governance in China. International Journal of Accounting Information Science and Leadership, 3 (5). pp. 52-64. ISSN 1940-9524

Abstract

The author examines corporate governance qualitatively and applies corporate governance principles to Chinese companies, especially the state owned enterprises. The paper reviews the meaning and importance of corporate governance, the institutional structures that exist, and the corporate governance problems that typically arise. A significant problem with achieving good corporate governance lies with the agency problem. Overcoming this problem therefore is crucial. Key characteristics of good corporate governance emerge. Good corporate governance depends upon company specific structures such as the board of directors as well as market information flows. Corporate governance is examined in its peculiarly Chinese setting. The paper traces the development of reform in China and how it has impacted corporate governance. Developments such as domestic listing and foreign listing are examined as to their impact on corporate governance. Chinese corporate governance still faces many challenges. Corporate governance is often weak because of a variety of problems. Among these are fragmented stock ownership, lack of a bond market, and poor quality information. Improving monitoring and the incentive structure remain significant challenges. Capital formation and securitization are often politically driven. State owned companies may have multiple masters, whose priorities may not lead to value creation. At the same time describing Chinese markets involves a moving target. Substantial changes have occurred in the last decade improving corporate governance and more changes will surely come soon.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Copyright Intellectbase International Consortium.
Faculty / Department / School: Historic - Faculty of Business - School of Accounting, Economics and Finance
Date Deposited: 09 Apr 2013 02:59
Last Modified: 10 Oct 2014 05:44
Uncontrolled Keywords: China, Corporate Governance, Emerging Markets
Fields of Research : 14 Economics > 1402 Applied Economics > 140202 Economic Development and Growth
14 Economics > 1499 Other Economics > 149901 Comparative Economic Systems
14 Economics > 1402 Applied Economics > 140207 Financial Economics
Socio-Economic Objective: E Expanding Knowledge > 97 Expanding Knowledge > 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
E Expanding Knowledge > 97 Expanding Knowledge > 970114 Expanding Knowledge in Economics
URI: http://eprints.usq.edu.au/id/eprint/19938

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