Transforming Corporate Governance in Chinese Corporations: A Journey, Not a Destination

The article offers a systemic, historical, and rigorous study of the transformation of Chinese corporate governance, focusing on its development from a totally administrative model, being one which relies on government and administrative power and imposes on corporations' controllers administra...

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Bibliographic Details
Published in:Northwestern journal of international law & business 2018-12, Vol.38 (2), p.187-232
Main Authors: Keay, Andrew, Zhao, Jingchen
Format: Article
Language:English
Subjects:
Comparative advantage
Corporate governance
Economic development
Economic growth
Economic reform
Market economies
Political parties
Political systems
Power
Public policy
Stockholders
Strategic management
Studies
Success
Sustainable development
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Summary:The article offers a systemic, historical, and rigorous study of the transformation of Chinese corporate governance, focusing on its development from a totally administrative model, being one which relies on government and administrative power and imposes on corporations' controllers administrative duties and objectives, to a hybrid model which has both administrative and economic governance characteristics. The article assesses whether administrative power will hinder corporate governance transformation in China on its journey towards a sound and sustainable model. We opine that the government continues to have a key role to play in corporate governance in China which makes administrative interference and power something that is embedded in corporate governance regimes through public and political policies, law enforcement, and strategic management policies for corporations. The administrative involvement might sacrifice efficiency, and effective market and corporate responses. However, it is observed that it may bring comparative advantages for Chinese corporate governance in terms of supporting long term strategic planning and the setting of multiple goals for State Owned Enterprises (SOEs, hereinafter), with government interference producing immediate action in order to prevent market failure.
ISSN:0196-3228