A comparison of shareholder identity and governance mechanisms in the monitoring of CEOs of listed companies in China

This paper compares the relative effectiveness of two measures by which the Chinese government attempted to improve the monitoring of listed companies: shifting the ownership of state shares from government agencies (GAs) to the corporate form of state-owned enterprises (SOEs), and strengthening corporate governance through statutory regulations and guidelines. The results show that SOEs are better able than GAs to monitor top executives, as indicated by a higher sensitivity of top executive turnover to firm performance. However, corporate governance mechanisms have no significant impact on the sensitivity of top executive turnover to firm performance. This study suggests that incentives for controlling shareholders are more important than governance mechanisms in replacing executives due to poor performance in a transitional economy such as China's, where institutions that support governance mechanisms are still being developed.     

From State to State: Quasi-privatization and Firm Performance

This paper uses a sample of Chinese listed companies whose controlling shareholders have changed from government agencies to state-owned enterprises＇ （SOEs）, to examine whether reducing government intervention while maintaining government＇s ultimate control could improve firm performance. The results show that the overall performance of these firms improves after the transfer of their controlling shareholders, due to improvements in both operating and non-operating performance. When we separate all samples into solely SOEs and other SOEs based on the controlling shareholder, we find that operating performance improved significantly in the solely SOE group, whereas non-operating performance improved significantly in the SOE group. In addition, we identify sources of performance improvement from two perspectives： corporate governance and related party transactions. The results imply that the Chinese Government should continue to decentralize control and, at the same time, continue to monitor firm operating efficiency.     

Financial distress and non‐executive director compensation: Evidence from state‐owned enterprises in South Africa post King III

Using a sample of South African state‐owned enterprises (SOEs), we examine the pre‐ and post‐period impact of King III on non‐executive director (NED) compensation with emphasis on financially distressed SOEs. This paper adopts a difference‐in‐differences analysis technique with repeated measures as the basis for testing the hypotheses. The revised Altman Z‐score model which incorporates features unique to emerging markets is used to measure financial distress. Our findings indicate that SOEs that adopted King III will increase NED compensation when the firm has a positive performance and will severely penalize NED when the firm faces financial distress. This study highlights the importance of well‐crafted corporate governance policies. It further sheds light on the importance of King III and how its implementation may prove vital for the success of an enterprise.     

Corporate Governance Reforms in the Post-1997 Asian Crisis: Is There Really a Convergence to the Anglo-American Model?

Abstract

Following the 1997-Asian crisis, a number of crisis-hit countries were committed to the rapid transformation of the corporate governance system to one that is modeled after the Anglo-American system. This, as the article argues, is based on a false premise, that what may have worked in the United States/United Kingdom can also be applied in East Asia. In this regard, the convergence at the firm level is seen to be more in “form” rather than in “substance”. This study assesses Singapore's corporate system in terms of its recognition of the merits of the Western model. It then details the corporate governance style of Temasek Holdings Limited (THL), a state- owned enterprise (SOE) in charge of monitoring government investments in companies. The choice of THL as a case study is based on the premise that THL operates very much like a private sector corporation. In addition, it has the ability to influence the standard of corporate governance of Singaporean SOEs. Because the SOEs are large players in their respective industries, the corporate governance of SOEs establish the standards and expectations for monitoring in non-SOEs. There are indications to suggest that the THL has taken into consideration certain aspects of corporate governance practices that may not necessarily be in line with those advocated by the Singapore government. The article argues that selective adaptation such as the style adopted in the THL more realistically portrays the corporate governance practices of East Asian corporations.     

“鞍钢宪法”与现代企业“民主管理”

在现代股份制的公司体制中,盛行的是"一股一票"的资本民主,公司治理只是股东及其代理人的权利,而员工被排除在公司治理结构之外。这种管理模式不利于激励员工的劳动积极性,从而增加公司治理成本。同时,外部监督机制在缺少健全的内部监督时无法起到应有的作用,而职工监督是内部监督机制的重要内容。"鞍钢宪法"中的"民主管理"理念一定程度上解决了上述难题。在中国社会主义市场经济体制中,尤其是在公有制经济中,劳动者是生产的主人,企业的民主管理不但是提高管理效率的手段,还是劳动者应有权利的体现。     

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.     

From share issue privatisation to non‐tradable share reform: a review of privatisation in China

Privatisation in China has proceeded on a gradual path over 30 years. In this paper, we present a detailed review of China's privatisation programmes from its Share Issue Privatisation (SIP) to its Non‐tradable Share (NTS) reform. The SIP was a primary offering process with state‐owned enterprises (SOEs) issuing new shares to private investors, but after their Initial Public Offering (IPO) approximately two‐thirds of the shares remained non‐tradable and were mainly held by the government. The SIP achieved only limited success because of its partial trading and partial privatisation, which led to the implementation of the NTS reform in 2005. The NTS reform aimed to dismantle the split share structure and provide opportunities for improving corporate governance and further privatisation. The review shows that the NTS reform has yielded greater success in improving firm performance and corporate governance than the SIP.     

The Roles of Corporatization and Stock Market Listing in Reforming China’s State Industry

This article provides an overview of China’s on-going efforts to reform its industrial state-owned enterprises (SOEs) through corporatization and stock market listing, and assesses the effects on the performance of these SOEs. It highlights changes, though limited, in both ownership pattern and corporate governance on the one hand, and rapid increase in concentration on the other as a result of these reform measures. It also explores the reasons why these changes have failed to significantly improve the performance of the SOEs, but have nevertheless paved the way for more complete privatization. The practical implications of these findings are also discussed.     

Current Studies on Corporate Governance in China

This paper mainly describes the situation, predicament and reasons about changing and reform of corporate governance of SOEs in China. Some consider that corporate governance of SOEs should be under the control of government, but others are against. Debate between them helps greatly to deepen understanding the changing and reform of corporate governance of SOEs.     

Effects of Social Capital,Top Executive Attributes and R＆D on Firm Value in Chinese Small and Medium-sized Enterprises

This study uses an unbalanced panel data analysis to examine the effects of social capital, top executive attributes and R ＆D on firm value in Chinese small and medium-sized enterprises （SMEs） listed on the Shenzhen Stock Exchange Small and Medium-sized Enterprises Board from 2007 to 2011. There are several interesting findings. First, the gender （male） and academic degree of the chairperson in the SMEs have a positive and significant effect on firm value. Second, social capital （measured by politieal connections, managerial business association networks and technology association networks） and R＆D have a positive effect on SME firm value. Third, the effect of politieal connections on firm value for state-owned enterprises （SOEs） is stronger than for non-SOEs, while the effect of business and technology networks on firm value for non-SOEs is stronger than for SOEs. Our study has important policy implications for SMEs that want to compete successfully in China.     

社会地位、在职消费与激励绩效

对企业高管进行有效激励，降低企业的激励成本，有利于企业的平稳运行和经济的繁荣发展。文章以2003-2014年所有A股上市公司为样本，对在职消费通过彰显"地位"、"威望"等而对企业高管产生的激励作用进行检验。研究发现，"地位"、"威望"等精神层面的非物质因素对企业高管具有激励作用，并在激励效果上对货币薪酬具有替代作用：国有企业中，在职消费更可能作为货币薪酬的替代性补偿而产生激励作用；民营企业中，在职消费更可能发挥精神层面的激励替代作用。而在货币薪酬等物质激励得到相对满足的情况下，考虑了"地位"、"威望"等精神因素的激励契约具有更高的激励相容性，能够有效地为企业节约激励成本，提高内部资源配置效率，进而提升股东价值。     

Education and welfare program compliance: Firm-level evidence from a pension reform in China

This study examines how firms with heterogeneous human capital quality respond differently to a welfare policy shock. In 2002, China expanded pension mandates from state-owned enterprises (SOEs) to private enterprises. Based on data covering all median and large manufacturers in China (around 250,000 firms), we find that their compliance rates varied widely across firms and increased in the average education level of employees. Utilizing these heterogeneous responses at the firm level, we estimate that the pension reform might have increased the return to education of employees by 8.75%. To address endogeneity in firms' human capital levels, we exploit the historical scale of local university as an instrumental variable. Moreover, we use SOEs as a control group, which was not directly affected by the policy shock. We find our empirical estimates robust to both measures.     

CEO compensation and firm performance in Japan: Evidence from new panel data on individual CEO pay

Prior studies on Japanese executive compensation have been constrained by the lack of longitudinal data on individual CEO pay. Using unique 10-year panel data on individual CEO's salary and bonus of Japanese firms from 1986 to 1995, we present the first estimates on pay-performance relations for Japanese CEO compensation. Specifically we find consistently that Japanese CEO's cash compensation is sensitive to firm performance (especially accounting measures), and that the “semi-elasticity” of CEO's cash compensation with respect to ROA is 1.3 to 1.4, which is in general agreement with prior estimates elsewhere. As such, our estimates do not support that Japanese corporate governance is unusually defunct with regard to the significance and size of the sensitivity of CEO compensation to accounting profitability. On the other hand, to be consistent with the literature on Japanese corporate governance that tends to downplay the role of shareholders and stress the role of banks and employees, we find that stock market performance tends to play a less important role in the determination of Japanese CEO compensation. Finally, we find that the bonus system makes CEO compensation more responsive to firm performance in Japan. The finding is in contrast to the literature on compensation for regular employees in Japan which often argues that bonus is a disguised base wage. J. Japanese Int. Economies 20 (1) (2006) 1–19.     

公司治理视角下的动态战略管理模型

公司治理通过战略管理对企业绩效产生影响,战略管理是公司治理对企业绩效影响的关键中间变量,管理者的战略选择行为受公司内部治理和外部治理的约束。文章认为,需要从公司治理的层面对企业的战略管理进行审视,注重企业文化环境的营造和组织学习能力的提高。     

日本的企业改革与终身雇佣制的新动向

终身雇佣制曾经作为日本型企业管理模式的主要特征之一,备受赞赏。但近年来对于这一雇佣制度的评价出现逆转,终身雇佣制过时论盛行。从理论上讲,终身雇佣制是支撑日本企业竞争能力的一个重要因素,日本企业不会简单抛弃;从日本企业改革的实践来看,许多企业开始减少固定工的数量,但企业对于主要的技术人员、管理人员和技术工人仍然坚持适用终身雇佣制度。日本企业正在通过改革增加雇佣制度的柔软性和灵活性,但是终身雇佣这一适合日本社会的雇佣制度仍然具有强大生命力。     

中国国有企业员工关系的困境

文章站在人力资源管理的高度 ,从员工关系的角度出发 ,对我国国有企业员工关系现状及其成因进行了理性的分析研究。文章认为中国国有企业员工关系面临的问题主要有三个方面 :一是员工受聘稳定程度较高 ,而参与企业管理程度较低 ;二是人员结构比例失衡 ,上下级沟通交流不足 ;三     

Ownership concentration and financial policy of China's listed firms

This study examines the role of ownership concentration, measured by the top-five shareholders' equity ownership, in shaping corporate finance policies in China. Among privately-owned enterprises (POEs), ownership concentration has negative and positive effects on their debt and cash reserves, respectively, consistent with controlling shareholders' incentives to stave off business failures and ride out adverse future circumstances. These effects are more pronounced if POEs have high market-to-book, suggesting that growth opportunities heighten their controlling shareholders' desire to avoid debt and hoard cash. Although ownership concentration has similar effects on debt and cash in state-owned enterprises (SOEs), these effects in SOEs appear to reflect management discretion or conservatism. Our evidence suggests that ownership concentration is a key driver of corporate finance in an emerging market, but private and state ownership concentrations have seemingly similar but qualitatively different consequences.     

Does top management quality promote innovation? Firm-level evidence from China

The human capital in management teams plays an increasingly important role in firms' governance and policies. We construct a comprehensive index of top management quality using a principal component analysis to empirically prove top management quality's positive impacts on corporate innovation. This study finds that higher-quality management teams tend to invest more in research and development projects and apply for more and higher-quality of patents. These results are consistent after conducting a series of robustness checks. We control for potential endogeneity using a firm fixed-effects model, the instrumental variable approach, and the propensity score-matching method. Three main channels are tested through which higher-quality top management teams will lead to higher innovation: higher tolerance for failure, easing of financial constraints, and more hiring of high-quality inventors. Finally, further analyses reveal that the positive effects of top management quality on innovation are more obvious for high-tech, state-owned, and growing enterprises.     

Property rights security and firm survival: Micro-data evidence from China

The security of property rights has been found to play important roles in various aspects of firm behaviors. However, its effects on firm survival have been largely neglected in previous research. Using annual data of Chinese manufacturing firms over the period 1998–2008, we analyze the link between property rights security and firms' survival probabilities, differentiating firms into stated-owned enterprises (SOEs) and non-SOEs, and considering whether the linkage evolves over time. Examining a wide range of specifications, we find that the protection of property rights, by limiting government intervention and promulgating laws and rules, is crucial for firm survival. Moreover, better security of property rights benefits non-SOEs more. We also find that the beneficial effects of secure property rights on firm survival are more pronounced for years after 2003 when China speeded up deregulation to comply with its WTO commitments and reform target to establish a modern system of property rights than for years before 2002.     

The Empirical Study on Interaction between Corporate Ownership and Board Structure

Corporate ownership, board structure and leadership structure are important internal governance mechanisms. They have effect on firm performance, and also are affected by many internal factors of the firm. In this paper, by means of theory and empirical analysis, we discuss the relation between ownership and board structure and the determinants of them, find some significant results such as management ownership which is affected by firm performance, as well as relates to outside director ownership. These findings tell us that there exist some substitutions and complement relations in govemance mechanisms, which is important to the research on manner that corporate governance works.