Ascertaining the Notion of Board Accountability in Chinese Listed Companies

Abstract

Accountability is a concept that has been frequently referred to in Anglo-American systems and in the OECD’s corporate governance documents, as well as in the English translations of corporate governance documents from non-English speaking jurisdictions. It is in the Anglo-American literature, in particular, where the word finds prominence. It has been suggested in China that accountability is one of the basic principles of corporate governance that needs to be consistently enforced. But does this mean that board accountability, as it has been provided for in the Anglo-American system, is actually an element of Chinese corporate governance? If not, should it be adopted? Or should China develop a concept that is more appropriately included as a critical part of its own particular corporate governance needs? The paper aims to address these matters in order to ascertain where Chinese corporate governance stands on accountability as far as the boards of large listed companies are concerned, and what it should do. We opine that while there are elements of accountability in Chinese corporate governance, it does not have the form of accountability embraced in Anglo-American systems. But, it is argued, as China moves from having a system totally based on administrative governance to one that is based more on economic governance the kind of approach that applies in Anglo-American jurisdictions is likely to become more relevant. Within a hybrid corporate governance system combining elements of both administrative and economic governance, we develop a unique “wenze system” with forms and characters of accountability that is likely to develop to address the needs of corporate governance in China and the fostering of its listed companies.