Adaptation and Convergence in Corporate Governance: The Case of Chinese Listed Companies

Abstract

This article examines the emergence of the legal framework of corporate governance for listed companies in China from a comparative perspective. The main focus is on the relevance of the Chinese experience to the debate on global convergence in corporate governance. That debate centres on the extent to which systems of corporate governance are converging towards a single model. China provides an interesting case study because it is a country in which marketbased laws and institutions are relatively new and in the process of development. The article attempts to assess the manner in which China has combined convergence with adaptation to local conditions. A number of issues are analysed from this perspective. First, the process of enterprise reform and creation of company and securities law is examined so as to clarify the role envisaged for private capital in China. The role and regulation of financial markets is then considered by comparison with the position in the west and an assessment is made of the role of the state as controlling shareholder in most listed companies. A key factor in understanding the influence of the state is the structure, composition and role of the boards of directors in Chinese listed companies. Finally, China's position is considered from the perspective of recent research linking the growth of capital markets with strong investor protection and in particular minority shareholders' rights.