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

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  • Wang, Jiwei

Abstract

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.

Suggested Citation

  • Wang, Jiwei, 2010. "A comparison of shareholder identity and governance mechanisms in the monitoring of CEOs of listed companies in China," China Economic Review, Elsevier, vol. 21(1), pages 24-37, March.
  • Handle: RePEc:eee:chieco:v:21:y:2010:i:1:p:24-37
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Huang, Juan Juan & Shen, Yifeng & Sun, Qian, 2011. "Nonnegotiable shares, controlling shareholders, and dividend payments in China," Journal of Corporate Finance, Elsevier, vol. 17(1), pages 122-133, February.
    2. Xunan Feng & Anders C. Johansson, 2017. "CEO Incentives in Chinese State-Controlled Firms," Economic Development and Cultural Change, University of Chicago Press, vol. 65(2), pages 223-264.
    3. LI, Tao & SUN, Laixiang & ZOU, Liang, 2009. "State ownership and corporate performance: A quantile regression analysis of Chinese listed companies," China Economic Review, Elsevier, vol. 20(4), pages 703-716, December.
    4. Liao, Guanmin & Chen, Xin & Jing, Xin & Sun, Jianfei, 2009. "Policy burdens, firm performance, and management turnover," China Economic Review, Elsevier, vol. 20(1), pages 15-28, March.
    5. Paul McGuinness & Kevin Lam & João Vieito, 2015. "Gender and other major board characteristics in China: Explaining corporate dividend policy and governance," Asia Pacific Journal of Management, Springer, vol. 32(4), pages 989-1038, December.
    6. repec:spr:manint:v:55:y:2015:i:3:d:10.1007_s11575-014-0221-8 is not listed on IDEAS
    7. Henk Berkman & Rebel A. Cole & Lawrence J. Fu, 2014. "Improving corporate governance where the State is the controlling block holder: evidence from China," The European Journal of Finance, Taylor & Francis Journals, vol. 20(7-9), pages 752-777, September.
    8. Truong, Cameron, 2011. "Post-earnings announcement abnormal return in the Chinese equity market," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 21(5), pages 637-661.
    9. Chang, Eric C. & Wong, Sonia M.L., 2009. "Governance with multiple objectives: Evidence from top executive turnover in China," Journal of Corporate Finance, Elsevier, vol. 15(2), pages 230-244, April.
    10. Gong, Rong & Marsden, Alastair, 2014. "The impact of the 2007 reforms on the level of information disclosure by the Chinese A-share market," China Economic Review, Elsevier, vol. 30(C), pages 221-234.

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