Reforming the Chinese corporate governance system : a comparative law and economic analysis

摘要

One of the major economic themes which characterised the development of modern company law was the well-documented separation of ownership from control and the increase in management control brought about by the wide dispersion of share ownership in large public companies.The growth and complexity of the modern corporation with diversified ownership created the need for governance mechanisms to facilitate the monitoring of managers and to restrain them from acting inappropriately, while not unduly restricting their ability to make decisions. The issue of corporate governance has been fiercely debated in both the US and the UK for several decades. The impact of globalisation and the recent financial crises in East Asia and elsewhere have spurred on corporate governance reform, which is now being implemented in many jurisdictions around the world. In recent years, China appears to have adopted some of the basic corporate governance structures of the Anglo-American system. However, little comparative empirical work has so far been undertaken to document systemic differences in ownership structures, institutional arrangement and legal rules betweenthe current Chinese corporate governance system and the systems in the UK and the US, or to determine how a corporate governance regime can best be designed to overcome the agency problems created by the separation of ownership from control in the Chinese context. In this thesis, we investigate the characteristics of China's corporate ownership structure and assess how effective shareholders are in monitoring directors' activities; we examine how boards are structured and function to ensure the efficient running of the company; and we consider the legal duties imposed on directors and how these duties are enforced in China, drawing comparisons and contrasts with the UK. Also, given the distinctive features of the Chinese corporate governance system, we estimate a regression model to investigate the relationship between corporate governance and corporate performance in China. Our results indicate that the weakness of the Chinese corporate governance system is not only a consequence of the concentrated state-ownership structure. This weakness is also in part due to the ineffectiveness of internal monitoring rules, inadequate/incomplete law and poor law enforcement. Finally, we provide some suggestions for the Chinese government to improve the Chinese corporate governance system.