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Corporate Governance in China: Then and Now


  • Cindy A. Schipani
  • Liu Junhai


Corporate governance has become a globally debated topic. As multinational corporations enter new global markets, complications abound due to the myriad of corporate governance rules existing among the various legal systems. One example of the new markets becoming more available to American investment is the Chinese market. In light of both the grant of permanent normal trade relations (PNTR) to China and China's anticipated membership in the World Trade Organization (WTO), the American business community is apt to find more opportunity for investment in China. American investors are likely to be increasingly interested in understanding the current Chinese corporate governance regime as they consider the Chinese market for investment of their assets. The goal of this paper is to provide an analysis of the corporate governance system in China and offer some suggestions for improvement to make the Chinese market more attractive to foreign investors. This paper is organized as follows. Part I provides general background information on the historical corporate governance structures prevalent in China. Part II then analyzes current governance issues, in particular those occurring in the context of corporatization of China's State-owned enterprises. Part III offers proposals for reform and is followed in Part IV by our concluding remarks.

Suggested Citation

  • Cindy A. Schipani & Liu Junhai, 2001. "Corporate Governance in China: Then and Now," William Davidson Institute Working Papers Series 407, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2000-407

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    Cited by:

    1. Allen, Franklin & Qian, Jun & Qian, Meijun, 2005. "Law, finance, and economic growth in China," Journal of Financial Economics, Elsevier, vol. 77(1), pages 57-116, July.
    2. Ahrens, Joachim & J√ľnemann, Patrick, 2010. "Transitional institutions, institutional complementarities and economic performance in China: A 'Varieties of Capitalism' approach," Discourses in Social Market Economy 2010-11, OrdnungsPolitisches Portal (OPO).
    3. Franklin Allen & Jun & Chenying Zhang & Mengxin Zhao, 2012. "China's Financial System: Opportunities and Challenges," NBER Chapters,in: Capitalizing China, pages 63-143 National Bureau of Economic Research, Inc.
    4. Kato, Takao & Long, Cheryl, 2006. "Executive Compensation, Firm Performance, and Corporate Governance in China: Evidence from Firms Listed in the Shanghai and Shenzhen Stock Exchanges," Economic Development and Cultural Change, University of Chicago Press, vol. 54(4), pages 945-983, July.
    5. Kato, Takao & Long, Cheryl, 2011. "Tournaments and managerial incentives in China's listed firms: New evidence," China Economic Review, Elsevier, vol. 22(1), pages 1-10, March.
    6. Takao Kato & Cheryl Long, 2004. "Executive Compensation, Firm Performance, and State Ownership in China: Evidence from New Panel Data," William Davidson Institute Working Papers Series 2004-690, William Davidson Institute at the University of Michigan.

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    corporate governance; law reform; China; corporate law;


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