Corporate Governance in China: A Survey*

2020 ◽  
Vol 24 (4) ◽  
pp. 733-772 ◽  
Author(s):  
Fuxiu Jiang ◽  
Kenneth A Kim
Keyword(s):  
Corporate Governance ◽  
Agency Problems ◽  
Future Research ◽  
Minority Shareholders ◽  
Controlling Shareholder ◽  
Controlling Shareholders ◽  
Agency Conflict ◽  
Concentrated Ownership ◽  
The Usa ◽  
Corporate Social

Abstract This article surveys corporate governance in China, as described in a growing literature published in top journals. Unlike the classical vertical agency problems in Western countries, the dominant agency problem in China is the horizontal agency conflict between controlling and minority shareholders arising from concentrated ownership structure; thus one cannot automatically apply what is known about the USA to China. As these features are also prevalent in many other countries, insights from this survey can also be applied to countries far beyond China. We start by describing controlling shareholder and agency problems in China, and then discuss how law and institutions are particularly important for China, where controlling shareholders have great power. As state-owned enterprises have their own features, we separately discuss their corporate governance. We also briefly discuss corporate social responsibility in China. Finally, we provide an agenda for future research.

Dividend Policy with Controlling Shareholders

2015 ◽  
Vol 16 (1) ◽  
Author(s):  
Maribel Sáez ◽  
María Gutiérrez
Keyword(s):  
Empirical Evidence ◽  
Dividend Policy ◽  
Empirical Literature ◽  
Minority Shareholders ◽  
Dividend Payout ◽  
Controlling Shareholders ◽  
Legal Rules ◽  
Ownership Structures ◽  
Agency Conflict ◽  
Concentrated Ownership

AbstractThis Article investigates the determinants of dividend policy in firms with concentrated ownership structures. A review of the empirical literature shows that dividend payout ratios are lower in firms with controlling shareholders. We explain this finding as a consequence of the legal rules governing cash distributions, which leave the dividend decision in the hands of the firm insiders, and the lack of monitoring mechanisms for checking the power of controlling shareholders. The analysis of the empirical evidence on dividend policy points to the existence of an unresolved agency conflict between controlling shareholders and outside investors. We conclude that controlling shareholders are currently using the dividend policy to expropriate minority shareholders.

Principal–principal agency conflicts, product market competition and corporate payout policy in China

2020 ◽  
Vol 14 (3) ◽  
pp. 265-279
Author(s):  
Amjad Iqbal ◽  
Xianzhi Zhang ◽  
Muhammad Zubair Tauni ◽  
Khalil Jebran
Keyword(s):  
Market Competition ◽  
Agency Problems ◽  
Payout Policy ◽  
Agency Conflicts ◽  
Minority Shareholders ◽  
Firm Level ◽  
Content Type ◽  
Agency Conflict ◽  
Concentrated Ownership ◽  
Country Level

Purpose The purpose of this paper is to examine the interaction between competition and corporate payout policy and more specifically to answer the question that whether competition mitigates the principal–principal agency conflicts and influences firms to distribute dividends to shareholders in Chinese corporations. Design/methodology/approach This research models measures of competition with scaled measures of dividends and analyzes a sample of 16,730 firm-year observations from Chinese-listed manufacturing firms for the period spanning 2003 to 2016. Further, this research uses the Tobit model (a censored regression) to empirically test the proposed hypotheses. Findings This research finds that intense competition not only mitigates agency problems and forces firms to disgorge cash but also increases a firm’s likelihood to pay dividends and weakens the negative association between agency conflicts and dividends. Practical implications The results show an important policy implication for the industry. As the principal–principal agency conflict restrains the dividends, the regulatory authorities could encourage a competitive environment and a more diverse ownership structure to induce a higher dividend rate and protect the minority shareholders. In addition, this study also has implications for other emerging markets characterized by concentrated ownership and principal–principal agency problems. Originality/value This study adds to the literature related to the disciplinary role of competition and identifies competition as a significant determinant of corporate payout policy. Furthermore, this research extends earlier research on corporate payout decisions that besides firm-level corporate governance and country-level legal system, industry-level competition also influences corporate payout decisions, significantly.

scholarly journals DEBT POLICY AS CORPORATE GOVERNANCE MECHANISM IN CONCENTRATED OWNERSHIP

2009 ◽  
Vol 6 (2) ◽  
Author(s):  
Mutamimah .
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Governance Mechanism ◽  
Minority Shareholders ◽  
Empirical Examination ◽  
Agency Conflict ◽  
Concentrated Ownership ◽  
Corporate Governance Mechanism ◽  
Debt Policy ◽  
Market Indicator

This research aims to test the debt policy as a mechanism to reduce agency conflict among majority and minority shareholders. This test aims to answer the problems to what extend debt can be used as corporate governance mechanism in a sense of reducing agency conflict. This research is important since most of company ownership structure in Indonesia is categorized concentrated structure, where its make a conflict between majority and minority shareholders. The populations of the research are companies that go public in the Indonesian capital market until the year of 2003. These samples of this research consist of 40 companies that are selected based on nonprobability technique with purposive sampling method. They were divided into two groups, high concentrated ownership structure and low concentrated ownership structure. In processes testing the hypothesis, 2 indicators were used, i.e. market indicator and accounting indicator. Event study analysis was used for market indicator, whereas multiple regression analysis was used for accounting indicator. Based on empirical examination result, it is generally concluded that debt policy cannot be used as mechanism to reduce agency conflict among majority and minority shareholders, both at high and low concentrated ownership structure. This is because of average company debt are higher than average industry debt. Debt policy tend be used as a tool of expropriation to minority shareholders. The expropriation is higher at high concentrated ownership structure rather than at low concentrated ownership structure and the difference is significant.

ANALISIS PENGARUH TATA KELOLA PERUSAHAAN YANG BAIK TERHADAP RASIO PEMBAYARAN DIVIDEN

2007 ◽  
Vol 3 (1) ◽  
pp. 1
Author(s):  
Eko Budi Santoso
Keyword(s):  
Corporate Governance ◽  
Investor Protection ◽  
Dividend Payout ◽  
Controlling Shareholders ◽  
Concentrated Ownership ◽  
Good Corporate Governance ◽  
Crucial Problem

Investor protection in highty concentrated ownership as in Indonesia is a crucial problem. Expropriation tends to be high in lower investor protection because controlling shareholders can implement policies that benefit themselves at the expense of outside investors. In a high expropriation, outside investors will choose dividends rather than retained earnings.This paper examines good corporate governance as a solution.for a good investor protection in Indonesia. Using a sample of 245 firms for observdion period of 2001-200j, the results slows that stronger investor ptotection related with lower dividend payout ratio.Kqtwords : Good Corporate Governance, Dividend Payout Ratio,Investor Protection, Concentrated Ownership.

scholarly journals Corporate Social Responsibility Performance & ETF Historical Market Volatility

2017 ◽  
Vol 9 (10) ◽  
pp. 30
Author(s):  
Vasiliki A. Basdekidou ◽  
Artemis A. Styliadou
Keyword(s):  
Corporate Governance ◽  
Community Development ◽  
Fair Trade ◽  
Green Building ◽  
Market Volatility ◽  
The Other ◽  
Future Research ◽  
Financial Instruments ◽  
Corporate Social ◽  
Number Of Firms

In investment and trading, different CSR moral ethical firms, categorized in a number of groups, may be suitable for different financial instruments (i.e. USA sector ETFs) and different market volatility situations. For the purpose of this article we first (i) analyze the trading return performance of four CSR categories (in particular: activism, community development, corporate governance, and environment); and then (ii) examine and comment the correlation between the market performance of a number of firms belonging in these four CSR categories and historical ETF market volatility. Finally, we (iii) suggest CSR firms as trading tools according to dominant market volatility. Other CSR categories (like: fair trade & supply chain, green building, philanthropy & corporate contributions, etc.) would be examined in future research by following the introduced by this paper approach. Paper concludes that, in relatively less volatile markets the Environment CSR ethical firms display better results. On the other hand, in strong market volatile situations it is better to trade Community Development CSR and Corporate Governance CSR ethical firms. Finally, the Activism CSR ethical firms are uncorrelated with the market volatility, as well as their performance is poor in all market cases.

scholarly journals Investor Protection and Agency Theory in Corporate Governance in Pakistan

2021 ◽  
Vol 3 (1) ◽  
pp. 12-21
Author(s):  
Imtiaz Ahmed Khan ◽  
Altaf Hussain Abro ◽  
Farooque Ahmed Leghari
Keyword(s):  
Corporate Governance ◽  
Agency Theory ◽  
Agency Cost ◽  
Corporate Structure ◽  
Minority Shareholders ◽  
Private Benefits ◽  
Controlling Shareholders ◽  
Global Trend ◽  
The Cost ◽  
Very High

The paper discusses the minority shareholders’ protection under the quantumof agency cost in corporate governance in Pakistan. The agency theory statesthat in most of the cases, the controlling shareholders and the topmanagement are normally involved in expropriating the funds of the company.This phenomenon increases the agency cost. The agency cost is directlyproportional to the cost of functioning of the company. In other words, theagency cost is inversely proportional to the profit of the company. Accordingto the agency theory, if the agency cost is decreased, the profit for investorincreases. The Pakistani corporate sector is dominated by the businessfamilies, the state and an opportunity to get the private benefits at the cost ofother stakeholders. There are the different mechanisms as discussed andapplied around the world to minimize the agency cost so as to make companyfinancially strong and better profit for the investors. In Pakistan, the agencycost is very high. Hence, there is a need to revamp the corporate governancemechanism to reduce the agency cost in order to provide a better protection tominority shareholders in a particular in the context of the global trend keepingin the view of the nature of corporate structure in Pakistan.

CMS at 13: a retrospective of the journey

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Farrukh ◽  
Ali Raza ◽  
Fanchen Meng ◽  
Yihua Wu
Keyword(s):  
Future Research ◽  
Research Directions ◽  
Content Type ◽  
The Usa ◽  
Future Research Directions ◽  
Objective View ◽  
Corporate Social ◽  
Innovation Leadership ◽  
Number Of Citations

Purpose To commemorate the 13th anniversary of the Chinese Management Studies (CMS) and suggest future research directions, this study aims to present an overview of the CMS through a systematic bibliometric analysis from 2007 to 2019. The analysis emphasizes the trend of themes, structure of publications and citations, the most cited publications, the most productive authors, universities, countries and regions. Design/methodology/approach The study uses the data extracted from the Scopus database to present an overview; besides, it also uses VOSviewer and Bibliometrix software packages to visualize the intellectual network of CMS. Findings This analysis is based on 486 publications between 2007 and 2019. Results show that there is a rising trend in the number of citations to CMS. The researchers from China were the most frequent contributors to the journal, whereas researchers from the USA, Taiwan, Singapore and Australia were well represented. In addition, the results show that innovation, leadership, human resource management and corporate social responsibility have been the most important research themes in the journal. Practical implications This study offers an objective view of the CMS publication structure. The study’s findings can help the journal readers obtain a quick snapshot of the leading trends occurring in the journal. Furthermore, this study provides future research directions for the journals by underscoring important themes. Originality/value As the journal’s first retrospective, this study not only educates and enriches CMS’ global readers and aspiring contributors but can also be useful to its editorial board, as it provides several inputs in the form of future research directions to guide the journal’s progress.

The ultimate controlling owner and corporate governance in Brazil

2019 ◽  
Vol 19 (1) ◽  
pp. 120-140 ◽  
Author(s):  
Vicente Lima Crisóstomo ◽  
Isac de Freitas Brandão
Keyword(s):  
Corporate Governance ◽  
Emerging Market ◽  
Governance System ◽  
Private Benefits ◽  
Controlling Shareholder ◽  
Content Type ◽  
Controlling Shareholders ◽  
Private Benefits Of Control ◽  
Corporate Governance System

Purpose High ownership concentration makes controlling blockholders powerful enough to use private benefits of control and able to shape the corporate governance system to favor their own interests. This paper aims to examine the effect of the nature of the ultimate firm owner on the quality of corporate governance in Brazil. Design/methodology/approach Econometric models are estimated to assess whether the nature of the ultimate controlling shareholder affects the quality of the corporate governance system. Models are estimated using panel data methodology with coefficients estimated by the generalized method of moments system estimator. Findings The results show that the absence of a controlling shareholder has a positive effect on corporate governance, whereas the presence of a controlling blockholder, or a shareholder agreement among a few large shareholders, has a negative effect. This adverse effect holds when the controlling blockholder is a family or another firm. The findings are in line with the expropriation effect given that weaker corporate governance system facilitates controlling shareholders’ ability to extract private benefits of control. The findings also give support to the substitution effect as powerful blockholders take on the management monitoring function by weakening the board. Originality value Following important previous literature, the study investigates the effect of the nature of large controlling shareholders on the adoption of good corporate governance practices. The work provides additional evidence on the effect of the nature of large controlling shareholders on the quality of the corporate governance system in Brazil, taking into account the main kinds of controlling blockholders present in that market. The findings give support to both the expropriation and substitution hypotheses highlighting the presence of the principal-principal agency model in an important emerging market, Brazil.

Corporate governance and financial characteristic effects on the extent of corporate social responsibility disclosure

2014 ◽  
Vol 10 (4) ◽  
pp. 569-590 ◽  
Author(s):  
Grigoris Giannarakis
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Chief Executive ◽  
Financial Leverage ◽  
Content Type ◽  
The Usa ◽  
Financial Characteristics ◽  
Csr Disclosure ◽  
Corporate Social

Purpose – This study aims to investigate the relationship between corporate governance and financial characteristics and the extent of corporate social responsibility (CSR) disclosure in the USA. These corporate governance and financial characteristics are the board meetings, average age of board members, presence of women on the board, the board’s size, chief executive officer duality, financial leverage, profitability, company’s size, board composition and board’s commitment to CSR. Design/methodology/approach – The sample consists of 100 companies from the Fortune 500 list for 2011. The environmental, social and governance disclosure score calculated by Bloomberg is used as a proxy for the extent of CSR disclosure. A multiple linear regression was incorporated to investigate the association of corporate characteristics with CSR disclosure. Findings – Results indicate that the company’s size, the board commitment to CSR and profitability were found to be positively associated with the extent of CSR disclosure, while financial leverage is related negatively with the extent of CSR disclosure. Research limitations/implications – The research is based only on the presence or absence of CSR items in CSR disclosure, and it ignores the quality dimension which can lead to misinterpretation. The results should not be generalized as the sample was based on US companies for 2011. Originality/value – The study assists stakeholders to identify US companies through the extent of CSR disclosures which contributes to the understanding of determinants of CSR disclosure to improve the implementation of disclosure guidelines.

Political connections, ownership structure and quality of governance

2017 ◽  
Vol 13 (4) ◽  
pp. 358-377 ◽  
Author(s):  
Saidatou Dicko
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Political Connections ◽  
Minority Shareholders ◽  
Content Type ◽  
Compensation Structure ◽  
Theoretical Contribution ◽  
Concentrated Ownership ◽  
Quality Of Governance

Purpose The purpose of this paper is to ask the following question: is there a link between being politically connected, the quality of governance and the company’s ownership structure? Design/methodology/approach The author then examined Canadian companies from the S&P/TSX index for the year 2015. Findings Political connectedness is significantly associated with lower quality of governance in relation to shareholders’ rights; ownership concentration is associated with lower quality of governance in relation to the overall governance, board of directors, shareholders’ rights and compensation structure indices; ownership structure does not mediate the relationship between political connections and quality of governance; and number of political connections through the executive is associated with less risky governance practices in relation to compensation structure; in other words, when members of the executive are politically connected, the firm adopts better compensation practices. Research limitations/implications The time limitation is the main weakness of this study and probably the cause of observed mitigated results. Practical implications The author hope that the results will inform regulators on the need not only to further regulate the business-politics relationship, but also to consider the specific traits of concentrated ownership companies and the most critical aspects of corporate governance in politically connected firms, such as shareholders’ rights, particularly those of minority shareholders. For example, an intriguing case to investigate in the Canadian context would be Pierre Karl Péladeau’s foray into Quebec politics and the controversy ignited by his political bid in light of his position as majority shareholder (75 percent) in communications giant Quebecor Inc. Social implications In fact, the results shown that concentrated ownership firms have lower governance quality than non-concentrated ones. Furthermore, in a concentrated ownership context, the minority shareholders’ rights could be threatened. In this sense, the results also shown that shareholders’ rights seem to be the most critical governance issue for the politically connected Canadian firms. These results are therefore the indication that Canadian financial market regulators must take action about politically connected and concentrated ownership firms in order to further protect minority shareholders’ rights. Originality/value This study makes a double theoretical contribution by enriching the literature on corporate governance and by providing one of the first investigations into the direct and comprehensive relationships between political connections, governance and ownership structure.

Sign in / Sign up

Export Citation Format

Share Document