Chinese corporate governance and prospects for reform

Journal of Contemporary China

Volumn 14, Issue 43, 2005, Pages 317-338

  Ewing, Richard Daniel ^a  

^a Nixon Center   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

CORPORATE STRATEGY; ECONOMIC REFORM; MULTINATIONAL ENTERPRISE;

ASIA; CHINA; EASTERN HEMISPHERE; EURASIA; FAR EAST; WORLD;

EID: 18544386539     PISSN: 10670564     EISSN: None     Source Type: Journal    
DOI: 10.1080/10670560500065520     Document Type: Article

References (66)

1. Daniel Yergin and Joseph Stanislaw, The Commanding Heights (New York: Touchstone, 2002), p. xiii.
2. Stoyan Tenev and Chunlin Zhang, Corporate Governance and Enterprise Reform in China (Washington, DC: World Bank and the International Finance Corporation, 2002), p. 3.
3. Ibid., p. 1.
4. Remarks by Premier Zhu Rongji, 'Chinese Premier's work report at National People's Congress', BBC Monitoring International Reports, (5 March 2002) (via Lexis-Nexis).
5. Lin Yimin and Tian Zhu, 'The restructuring of ownership and governance in China', Seoul Journal of Economics, (Fall 2000).
6. Tenev and Zhang, Corporate Governance, p. 20.
7. Adam Smith, The Wealth of Nations (New York: Bantam Dell, 2003), book V, part III, p. 941.
8. The Chinese government has defined three categories of shares. State shares are owned by government institutions and are not permitted to trade on the market. Legal person shares can be owned by nongovernment institutions, commonly parent SOEs. Tradable shares can be owned by individuals and nongovernment institutions unable to own legal person shares. These shares are freely tradable on the domestic stock exchange.
9. Hung-gay Fung and Wai Kin Leung, 'Chinese financial liberalization: implications for corporate governance', The Chinese Economy 34(1), (2001), p. 7;
10. Kam Chan, Louis Cheng and Joseph Fung, 'Ownership restrictions and stock-price behavior in China', The Chinese Economy 34(1), (2001), p. 62.
11. Tenev and Zhang, Corporate Governance, p. 76.
12. Ibid., p. 23.
13. Ibid., p. xiii.
14. 'The wither away of the Party', The Economist, (1 June 2002) (viewed on 12 May 2003 at http://www.economist.com/ displaystory.cfm?story_id=1159535).
15. Interview with former PetroChina CEO Huang Yan, 'East meets West at PetroChina', Business Week Online, (28 June 2002) (viewed on 13 May 2002 at http://www.businessweek.com/bwdaily/dnflash/jun2002/ nf20020627_6954.htm).
16. Tenev and Zhang, Corporate Governance, p. 99.
17. Barry Naughton, 'Selling down the state: contested policy, new rules', China Leadership Monitor, no. 1, pt 2, (March 2002), p. 5.
18. Dexter Roberts, 'For China, two steps forward', Business Week, (12 November 2001), p. 22.
19. Tenev and Zhang, Corporate Governance, p. 95.
20. Chris Mallin and Rong Xie, 'The development of corporate governance in China', Journal of Contemporary China 7(17), (1998).
21. I b i d.
22. See, for example, Martin Conyon and Simon Peck, 'Board control, remuneration committees, and top management compensation', Academy of Management Journal 41(2), (1998), p. 150.
23. The Legend Group 2001-02 Annual Report, p. 47 (viewed on 13 May 2003 at http://www.legend-holdings.com/images/investor/ann_int_report/pdf/01_02/ F208.pdf).
24. 'Year 2001 performance contract with Vice President of PetroChina Company Limited and President of PetroChina Exploration and Development Research Institute', p. 2 (viewed on 2 April 2003, at http://www.sec.gov/ Archives/edgar/data/1108329/000114554902000160/u9815lexv4w19.txt).
25. 'Year 2001 performance contract with Vice President of PetroChina Company Limited and Chairman of the Board of Directors and General Manager of Daqing Oilfield Limited Company', p. 2 (viewed on 3 March 2001, at http://www.sec.gov/Archives/edgar/data/1108329/ 000114554902000160/u98151exv4w12.txt).
26. Tenev and Zhang, Corporate Governance, p. 58.
27. Ibid., p. 81.
28. Mallin and Xie, 'Development of corporate governance in China'.
29. CLSA Emerging Markets, Saints and Sinners of Corporate Governance, (April 2001) (viewed on 10 July 2002, at http://www.webb-site.com/ articles/Saints&Sinners.pdf).
30. 'Open the club', The Economist, (17 April 2003) (viewed on 28 April 2003, at http://www.economist.com/displaystory.cfm?story_id= 1715339).
31. Jeremy Siegel, Stocks for the Long Run (New York: McGraw-Hill, 1998), p. 82.
32. Catherine Holcombe, 'Growth in China's stock bubble raises questions of a future bust', South China Morning Post, (7 June 2001), p. 1.
33. Susan Lawrence, 'Ally of the people', Far Eastern Economic Review, (9 May 2002).
34. There is controversy about the accuracy of this figure. Some economists believe that the individual accounts were fraudulently opened by brokerage houses to hide their trading activities.
35. Remarks by Laura Cha, 'The future of China's capital markets and the role of corporate governance', luncheon speech at China Business Summit, 18 April 2001.
36. Barry Naughton, 'The politics of the stock market', China Leadership Monitor, no. 3, (June 2002), p. 3.
37. Clay Chandler, 'Chinese regulators delist a stock for the first time', Washington Post, (25 April 2001), p. E1.
38. 'China's Wang Zhongyu presents state council restructuring plan to Congress', Xinhua Domestic News Service, (6 March 2003).
39. Allen Cheng, 'New streamlined government wins Congress approval', South China Morning Post, (11 March 2003), p. 7.
40. Barry Naughton, 'The state asset commission: a powerful new government body', China Leadership Monitor, no. 8, (Fall 2003), p. 3.
41. Christine Chan, 'Banking supervision enters modern era', South China Morning Post, (19 March 2003), p. 7.
42. Qualified foreign institutional investors must meet several requirements, including having at least 8 billion RMB in paid-in capital. James Kynge, 'China loosens investment restrictions', Financial Times, (3 January 2003), p. 20.
43. 'Getting their skates on: long overdue reform in China's capital markets is in the air', The Economist, (3 June 2000) (viewed on 13 May 2003 at http://www.economist.com/displaystory.cfm?story_id=334886).
44. Cha, 'The future of China's capital markets'.
45. Bruce Einhorn and Alysha Webb, 'The People's Republic of mutual funds', Business Week, (17 December 2001), p. 53.
46. Cha, 'The future of China's capital markets'.
47. Shu-Cing Jean Chen, 'China's IPOs to test investors' patience', The Daily Deal, (11 December 2001).
48. CLSA Emerging Markets, Saints and Sinners of Corporate Governance, (April 2001), p. 48 (viewed on 10 July 2002, at http://www.webb-site.com/ articles/Saints&Sinners.pdf).
49. James Kynge, 'ABM Amro is on course for Chinese first', The Financial Times, (27 February 2003), p. 15.
50. Tenev and Zhang, Corporate Governance, p. 155.
51. Margaret Blair, Ownership and Control (Washington, DC: Brookings Institution, 1995), p. 77.
52. Naughton, 'Politics of the stock market', p. 3.
53. John Pomfret, 'Corruption charges rock China's leaders; party answers with damage control', Washington Post, (10 January 2002), p. A15.
54. Edward J. Epstein, Who Owns the Corporation? (New York: Priority Press, 1986), pp. 5-6.
55. As measured by proven crude oil reserves.
56. CNPC owns 158,241,758,000 state-owned shares of the 175,823,330,000 shares issued.
57. Form 20-F: Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, 'PetroChina Company Limited', (31 December 2001), p. 10.
58. Ibid., p. 10.
59. Ibid., p. 23.
60. BP has 17 directors, 11 outsiders; Exxon Mobil has 19 directors, 11 outsiders; Shell has 12 directors, eight outsiders.
61. Form 20-F, p. 88.
62. These performance measures are outlined in Kevin Murphy, 'Performance standards in incentive contracts', Journal of Accounting and Economics 30, (2001), p. 251.
63. 'Year 2001 performance contract with Vice President of PetroChina Company Limited and Chairman of the Board of Directors and General Manager of Daqing Oilfield Limited Company', p. 2 (viewed on 3 March 2001 at http://www.sec.gov/Archives/edgar/data/118329/000114554902000160/ u98151exv4w12.txt).
64. Chinese nationals can purchase A-shares that are traded on the Shanghai or Shenzhen stock exchanges. PetroChina is not listed on those exchanges, and therefore its Chinese national executives cannot own equity in the corporation. Independent nonexecutive director Bernabe is an Italian citizen and is able to own PetroChina stock. Also, there is no potential dilution since PetroChina has no treasury stock.
65. During the IPO, PetroChina floated H-shares on the Hong Kong Stock Exchange at HK$1.28 per share. American Depository Shares, equaling ten H-shares, were floated on the New York Stock Exchange for US$16.44 per share.
66. Mike Jensen and Kevin Murphy, 'CEO incentives - it's not how much you pay, but how', Harvard Business Review, (May/June 1990), p. 141.