Corporate Governance and Enterprise Reform in China Building the Institutions of Modern Markets

by Tenev, Stoyan; Zhang, Chunlin

• ISBN13: 9780821351369
• ISBN10: 0821351362
• Format: Paperback
• Copyright: 2002-04-01
• Publisher: World Bank Publications

Summary

As China continues in its evolution from a planned economy to a market economy, and from an agricultural to a manufacturing and service-oriented economy, issues arising from owner diversification, corporate governance, and labor resource allocation have come to the forefront. Most particularly, corporate governance is being focused on as the state continues its withdrawal from direct ownership.This study evaluates short- and medium- term corporate governance issues impacting companies involved in ownership diversification. It examines problems associated with governance such as cost and framework design and makes recommendations concerning the many facets of corporate governance.

Table of Contents

Foreword	vii
Javed Hamid
Homi Kharas
Acknowledgments	ix
Abbreviations and Acronyms	x
Executive Summary	xi
Introduction	1	(4)
The Evolution of Governance Mechanisms in China's State Sector	5	(24)
Corporate Governance in the Context of China's Overall Approach to Reform	5	(5)
From Danwei to the Modern Enterprise System	10	(10)
Agency Costs of Local Government Ownership and Enterprise Autonomy	20	(4)
Current Approach	24	(4)
Conclusion	28	(1)
The Corporate Governance of Transformed Small and Medium Enterprises	29	(46)
Ownership Transformation and Emerging Governance Issues	29	(11)
Role of Employees	40	(15)
Role of Banks	55	(15)
Role of Private Equity Investors	70	(4)
Conclusion	74	(1)
Ownership and Control of Listed Companies	75	(30)
Ownership Concentration and Types of Investors	76	(4)
Ownership and Corporate Governance Issues	80	(3)
Board of Directors	83	(16)
Board of Supervisors	99	(2)
Agency Problem of the Controlling Shareholder	101	(2)
Conclusion	103	(2)
Role of Stock Markets and Information Disclosure in the Corporate Governance of Listed Companies	105	(22)
Corporate Governance and Performance	105	(5)
Stock Market Role in Promoting Good Governance	110	(7)
Information Disclosure as a Tool of Corporate Governance	117	(9)
Conclusion	126	(1)
Building a Modern Governance System	127	(36)
Establishing Credible Penalties for Failure	127	(1)
Addressing the Agency Costs of Government Ownership	128	(7)
Strengthening Boards of Directors	135	(7)
Empowering Shareholders	142	(12)
Developing Capital Markets That Reward Good Corporate Governance	154	(2)
Improving Disclosure	156	(3)
Activating the Use of Various Corporate Governance Mechanisms	159	(1)
Conclusion	160	(3)
References	163