A review of corporate governance in China

The paper reviews the literature on internal and external corporate governance mechanisms in China. Chinese regulatory bodies have made considerable efforts to improve the corporate governance of listed firms. However, research has shown that most of the governance instruments that are effective in developed nations are less effective in China. We attribute the ineffectiveness to the large stake of the state in listed firms, strong political connections between listed firms and the government, and the lack of a truly independent judicial system. Some suggestions for making corporate governance more effective in China are provided.     

Research on reciprocal relationships between corporate governance and internal control

A lot of problems which are still in the relevant company governance and the internal control are demanded to be solved promptly. The company governance is still an exciting examination question in China. Though the internal control construction of China has been the suitable scale, but the connotation and the fixing position of the internal control are still in the stage of system control. Therefore it is still significant to be more thoroughly investigation and discussion to the company governance and the internal control. This paper gives the comprehensive examination to the company governance and the internal control progress from the angle of going to move from each other and it is necessary to conduct a research on their reciprocal relationships by combining corporate governance and internal control.     

Compensation negotiation and corporate governance: the evidence from China

This paper examines CEO pay dispersion for the listed companies in China. We apply a two-tier stochastic frontier model to the CEO compensation framework where asymmetric information generates a surplus between the minimum wage that CEOs accept and the maximum payment that firms offer. This surplus leads to CEO pay dispersion coming from the negotiation power between the CEO and the firm. We generate the surplus extracted by each CEO-firm pair and analyze how corporate governance affects them. An empirical analysis finds that: (1) On average, CEOs are paid 23.26% more than the benchmark; (2) additionally, we examine the bargaining power in state-owned enterprises (SOEs) and non-state-owned enterprises (non-SOEs). We find that CEOs in SOEs have less bargaining power due to compensation regulations. We then examine compensation for new CEOs hired externally and find that CEOs hired externally have less bargaining power on average; and (3) corporate governance has a significant effect on the salary bargaining power of each agent. More specifically, the CEO-Chairman dummy has a significant positive effect on the bargaining power of firms and CEOs, but the latter is larger. Board size has a negative effect on both. Independent directors help improve the bargaining power of the firms and board meeting times help enhance the bargaining power of the CEOs. Equity concentration has a significant negative effect on both sides.     

Incentive contracts,corporate governance,and privatization funds in Romania

This paper analyzes the governance problems of the Romanian Private Ownership Funds (POFs), critical institutions both in the privatization process and in the future ownership and control structure of the Romanian economy. Although the POFs share similar problems with mass privatization intermediaries elsewhere, the satisfactory performance of Romanian funds faces additional obstacles due to the bureaucratic character of their initial organization, the continuing involvement of the state in their governance and operation, and the complexity of the tasks that they are supposed to accomplish. The POFs are charged not only with governing companies and managing their portfolios, but with part of the task of selling the remaining state shareholdings. We review instruments of corporate governance that could potentially induce them to perform these tasks, and conclude that the standard practices are likely to be seriously deficient in the case of the Romanian POFs. One possibility which has not yet been adopted is an incentive payment scheme for POF executives. We analyze the difficulties of implementing such a scheme with a multi-task principal-agent model, and propose a practical solution to the incentive design problem. We argue that, while some such method is certainly necessary to induce the POFs to perform their assigned tasks even approximately, it is by no means sufficient to enliven the Romanian privatization process. The author is grateful for a research grant from the National Council for Soviet and East European Research, received through the Center for Economic Policy Research at Stanford University. Encouragement from Ralph W. Pfouts, discussion with Alexander Dyck, and comments from Roman Frydman on an earlier draft are gratefully acknowledged.     

CEO体制是公司治理体制的重大变革

自中国加入WTO以来,为了与国外公司治理模式接轨,中国的民营企业、高科技企业和一些国有企业纷纷引入西方的首席执行官制度(英文简称CEO).2001年以来,中国的很多著名民营与高科技企业如海尔、四川长虹、江苏春兰、平安保险、泰康人寿保险、网易、搜狐、新浪等企业都实行了CEO制度.根据网上查询结果,到目前为止,宣称自己为CEO的中国企业老总已经超过2500多个.中国<2002～2005年全国人才队伍建设规划纲要>中明确要"建设一支职业经理人队伍.逐步实行职业资格制度,加紧研究制定资质认证标准和市场准人规则.参照国际惯例,探索建立符合中国企业实际的首席执行官制度."     

公司治理与独立董事运行机制研究

本文在公司治理机制-权力配置、制衡（监督）与激励理论基础上,假设独立董事与股东之间的关系在本质上是委托代理关系。在引入信息沟通机制、独立董事的能力、独立董事在董事会申的比例、道德支付和独立董事的兼职收入等变量基础上,封传统委托-代理模型进行了拓展。本文试图运用数理模型对独立董事制度的运行机制进行实证研究,通过封模型的分析,以期解释和检验中国独立董事制度运行机制效果。     

Substitutes for legal protection: corporate governance and dividends in Victorian Britain1

Companies in Victorian Britain operated in a laissez‐faire legal environment from the perspective of outside investors, implying that such investors were not protected by the legal system. This article seeks to identify the alternative mechanisms that outside shareholders used to protect themselves by examining the dividend policy and governance of over 800 publicly traded companies at the beginning of the 1880s. We assess the importance of these mechanisms by estimating their impact on Tobin's Q. Our evidence suggests that dividends and well‐structured and incentivized boards of directors may have played a role in protecting the interests of outside investors.     

The institutional innovation and improvement in building of the East Asian corporate governance model

The East Asian corporate governance model is gradually established based on institutional innovation of western corporate governance. This paper holds that institutional innovation of the East Asian corporate governance model is mainly manifested in following aspects： the relational style of governance mechanisms, more intervention of government, high concentration of ownership structure and unique operation of the power institutions etc. This unique model of corporate governance is considered as one of the motivations of ＂East Asian Miracle＂, but it also causes many problems. After the Asian financial crisis, the East Asian countries and regions reform and improve their pattern of corporate governance and obtain some results. The paper deems that reduction of government intervention and legal protection provided by judicial system are crucial for corporate governance.     

The effects of corporate governance and ownership on the innovation performance of Chinese SMEs

We investigate the degree to which corporate governance and ownership affect the innovation performance of firms in China with a particular focus on privately owned small and medium enterprises. Using the appropriate theoretical frameworks, we derive hypotheses regarding the impact of ownership concentration, board size and composition, and the background of the CEO on innovative activity. These hypotheses are tested using a unique sample of 370 mostly private and relatively small Chinese firms in Zhejiang province, for the period 2004–2006. Using two measures of innovation, invention patents and new product sales, and a variety of estimation methods appropriate to each measure, we find limited evidence that corporate governance affects innovation performance, but the results do depend on the measure of innovation. In general, the results suggest that for this sample, corporate governance and ownership affect innovation activity more strongly when innovation is measured by patenting activity, rather than new product sales. We conclude with a discussion about why this might be.     

美国金融监管改革法案对公司治理的影响

美国金融监管改革法案主要针对金融业,但法案中的许多内容涉及到公司治理的变革,诸如董事选举、代理权取得、董事会构成、董事会风险委员会以及经纪人投票等新规定,这些将不可避免地影响美国的金融机构以及众多上市公司的公司治理。     

Cleaning the balance sheets of commercial banks in Eastern Europe and their role in corporate governance

We have… the makings of a genuine paradox that constitutes the most fundamental systemic obstacle to the economictransformation in Eastern Europe: the most impor tant aspect of the transition to a spontaneously functioning market economy cannot be initiated by market forces themselves. Indeed, the only force powerful enough to set the market forces in motion is the very state that is suppo sed to remove itself from the picture. And for a number of reasons, the state may be unable to accomplish this task. Frydman and Rapaczynski [ b, p. 268].     

Strong insiders,weak outsiders: A critical look at the Korean system of corporate governance

This study examines the approach of five Caspian coastal states ‐ Russia, Iran, Azerbaijan, Kazakhstan, and Turkmenistan‐toward the legal regime regarding the Caspian Sea in the 1990s. In particular, it tests the neorealist hypothesis regarding relative gains in explaining the approach of those five Caspian coastal states. This study demonstrates that concerns about relative gains matter, but not universally. Azerbaijan and Kazakhstan consistently pursued relative gains strategy. Yet, in the cases of three other Caspian states, Russia, Iran, and Turkmenistan, concerns about relative gains were not critical in determining the policy direction of these states.     

The impact of corporate governance to the economic value added listed company in BEI 2003-2004

The purpose of this research is to investigate the effect of Corporate Governance （CG） to the performance of the firm measured by Economic Value Added （EVA）. This research uses 64 samples for the year 2003-2004. The CG index is taken from the research of Siagian, Siregar and Rahadian （2006） and the EVA taken from ＂A hundred value creators companies＂ published by SWA Magazines in 2004-2005.
By grouping samples based on its mean, this research finds that samples in high CG index group have higher EVA than samples in low CG index group. The mean equality test shows the significant relation for this evidence.
Using simple and multiple regression method, CG index has positive and significant effect on EVA. This research uses sales growth, leverage, size, and age of the firm as control variables in multiple regression method. Consistent with research hypothesis, all control variables have positive and significant effect on EVA.
This research also investigate the effect of each component of CG index to EVA. ＂Equitable treatment of shareholders＂ and ＂disclosure and transparency＂ have positive and significant effect on EVA, but ＂right of shareholders＂, ＂role of stakeholders＂, and ＂responsibility of the board＂ do not have significant effect to EVA.
The sensitivity analysis is also done to investigate the effect of CG index to the performance of the firm if ROA and ROE were used as proxy of performance. The result shows that CG index has positive and significant effect to those various performance mesurement. Based on its coefficient, CG index is superior in affecting ROE more than EVA and ROA.     

Holding company risk in China: a final step of state-owned enterprises reform and an emerging problem of corporate governance

Public Enterprise Reform in China has reached a plataeu, and is awaiting the last step of privatization. Most of non-regulated industries in China has improved their competitiveness thorough a hard and intense competition, particularly in the home appliance industry. However, it still happened that excellent companies with nationwide brands suddenly fall into severe difficulties and suddenly disappears in the industry, as we seen in the early 1990's. Author argues that this is caused by structure of corporate governance in China, which can facilitate to enhance the control right of the controlling shareholder, that is the government for the most of listed company in China, compared to their holding cash flow right. This corporate structure, which is called “pyramiding” allows an implicit controller of the company, the municipal government, to exploit. In the cases of listed company in China, the “holding company” is the conduit of this risk. Experiences of 2 companies from home appliance industries in China will be documented here.     

Industrial policy,corporate governance,and the competitiveness of China's national champions: The case of Shanghai Baosteel Group

The paper presents an in-depth case study of the Shanghai Baosteel Group as a contribution to the overall assessment of the competitiveness and catch-up capability of the Chinese national champions after China's WTO accession. Significant competitive advantages of the firm in the domestic industry are identified, with cautionary remarks concerning the future stiff competition with the global steel giants. Through detailed examinations of the corporate governance mechanism and the industrial policy implementation in Baosteel and the whole steel sector, the paper sheds light on the institutional and policy challenges that the Chinese government has to face in building up its big businesses. It is concluded that whether Baosteel could emerge as a globally competitive steel firm depends critically upon the effectiveness of both the further reform of the state-dominated corporate governance system and the improvement of the industrial policy enforcement.     

Foreign direct investment by Japanese firms and corporate governance: in relation to the monetary policies of China, Korea and Japan

Reflecting upon the lessons from the Asian currency crises, more attention is being paid to the importance of consolidation for the domestic financial and capital markets, as well as international cooperation to avoid disturbing factors from abroad, such as massive inflows of speculative capital. The aim of financial reforms being executed in the East Asian countries, such as Japan, Korea, and China, is to improve the managerial efficiency of the business corporations and financial institutions.Recently, foreign direct investment by Japanese firms in the rest of the East Asia has been recovering. However, the existence of a financial system to realize optimal corporate governance is indispensable for the enhancement of direct investment. Namely, it is necessary to improve corporate profitability, and to distribute the increment of such profits between the host and the investor countries, in order to boost the welfare of the respective citizens, notwithstanding the type of foreign direct investment.     

中国参与国际金融危机治理与西方危机治理模式的比较

与以"华盛顿共识"为代表的西方金融危机治理模式相比,中国参与国际金融危机治理有着自身独特的理念和行为方式,并能够在治理实践中不断拓展和深化。通过两者的对比分析,在借鉴西方有益经验和摒弃失误局限的基础上,中国才能在参与国际金融危机治理过程中发挥自身的优势、做出建设性的贡献。