Board Composition, Leadership Structure and Performance in Chinese Shareholding Companies

Abstract

The corporatization reform in Chinese SOEs has been largely influenced by the Anglo-American corporate governance model, but at issues is whether or not this model suits China's current institutional and cultural contexts. Agency theory and stewardship theory are two corporate governance theories that provide conflicting assumptions about human behavior and different prescriptions about governance mechanisms. In this study we drew upon both theories and developed competing hypotheses about the relationships between board composition, leadership structure, and organizational performance in Chinese shareholding companies. We gave special attention to China's unique institutional context and its influence on board attributes. The hypotheses were tested with a sample of Chinese listed companies. Overall, the stewardship hypotheses received stronger empirical support.