Ownership Structure Corporate Governance And Corporate Performance The Case Of Chinese Stock Companies

June 1997 Does the ownership structure of publicly listed firms in China affect their performance? Yes. Institutional shareholders seem to have a positive impact on corporate governance and performance; state ownership seems to lead to inefficiency; and an overly dispersed ownership structure can create problems in the Chinese setting. Xu and Wang investigate whether ownership structure significantly affects the performance of publicly listed firms in China and if so, in what way. With public listed stocks, one can quantify the ownership mix and concentration, which makes it possible to study this issue. The authors use the recent literature on the role of large institutional shareholders in corporate governance as a theoretical base. A typical listed stock company in China has a mixed ownership structure, with three predominant groups of shareholders- state, legal persons (institutions), and individuals- holding about 30 percent of the stock. (Employees and foreign investors together hold less than 10 percent.) Ownership is heavily concentrated: the five largest shareholders accounted for 58 percent of outstanding shares in 1995, compared with 57.8 percent in the Czech Republic, 42 percent in Germany, and 33 percent in Japan. Their empirical analysis shows that the mix and concentration of stock ownership do indeed significantly affect a company's performance: * There is a positive, significant correlation between concentration of ownership and profitability. * The effect of concentrated ownership is greater with companies dominated by institutions than with those dominated by the state. * The firms' profitability is positively correlated with the fraction of legal person (institutional) shares; it is either negatively correlated or uncorrelated with the fraction of state shares and with tradable A-shares held mostly by individuals. * Labor productivity tends to decline as the proportion of state shares increases. This paper- product of the Office of the Director, Economic Development Institute- part of a larger effort in the Bank to understand and disseminate various models of corporate governance. The study was funded by the Bank's Research Support Budget under the research project Ownership Structure, Corporate Governance, and Firm's Performance (RPO 681-08).

This book examines the nature of the marketization of corporate boards following the introduction of the split share reform, corporate board and shareholder relations, corporate performance, and risk-taking conduct in China. The chapters cover topics such as determinants of corporate board size and independence, corporate risk-taking conduct under different controlling shareholder types. The book deepens our understanding of corporate governance mechanisms as most previous studies have limited their findings using mainstream perspectives grounded on neoclassical theory. It outlines that China’s corporate board composition is determined by the board’s scope of operation, monitoring, bargaining power, and other governance mechanisms and regulations. It also offers a comparison between China’s experience with other economies in general and other transition economies in particular. As such, the book represents an essential overview of the current concerns regarding corporate governance in China. It is of great interest to legal researchers, policymakers, and legal practitioners working with business investments in China.

As China has aligned itself more closely with the international economy, it has also sought to adopt more Western-style corporate governance mechanisms. This report provides an overview of overview of corporate governance mechanisms in China, as well as an examination of continuing challenges and policy implications.

Using detailed case studies of the first nine mainland Chinese companies to be listed on the Hong Kong stock exchange (1993 94), Alice de Jonge examines the evolution of corporate governance law and culture in China s H-share market. A story emerges not of tensions between ideas of corporate governance from two different legal systems Hong Kong vs. mainland Chinese nor about legal convergence as China adopts concepts from Anglo-American jurisdictions. Rather, it is a story of individual firms being pragmatic in mediating the different agendas of state-agencies that own or control them. Corporate Governance and China s H-Share Market looks at corporate governance in a cross-border context is unique in providing a detailed understanding of China s H-share market reveals why a beer company was the first ever Chinese firm to be listed overseas. This fascinating work will appeal to postgraduate students and scholars of corporate governance, Asian law and legal systems and Asian business, as well as Chinese scholars more generally. Professionals such as law practitioners working in Chinese law will also find the book of interest.

By assessing a broad range of laws, regulations and codes, this book provides a valuable reference for understanding how much has been achieved in Chinese corporate governance and the main ambitions of future reform efforts.

Based on extensive original economic analysis, Chen examines key questions relating to corporate governance in China, including the relationship between ownership structure and corporate performance, the determinants of capital structure, and the nature of contemporary governance structures. It concludes that corporate performance is positively related to ownership concentration, but negatively related to state ownership, and that contemporary corporate governance structures are heavily dependent on previous structures in the centrally-planned economy and on the path of transition to the market economy.

Since its opening up and economic reforms in 1979, China has undergone tremendous economic growth and social development, with a ten percent real gross domestic product growth per year on average through 2013. In spite of such an accomplishment, the current economic growth model in China, which is mainly triggered by the export-led policy and the huge government investment, has been challenged by potential external and internal risks, which do not support sustainable economic growth in the long run. In this book, the author comprehensively reviews the corporate governance practices in China, identifying the major problems within such practices. It is contended that these problems have been seen as the major challenges facing the Chinese economy, and further, that the current weakness of corporate governance practices in China can be ascribed, to a great extent, to the incompleteness and weakness of law enforcement.