Ownership structure and corporate governance in China: some current issues

Abstract

PurposeThis paper seeks to investigate some current issues of ownership structure and corporate governance in China.Design/methodology/approachThe methodology is a review, analysing issues of ownership structure and reviewing problems in corporate governance, followed by some suggestions for improvement.FindingsIt is found that the heavily concentrated equity ownership in the hands of large state‐owned shareholders mainly decides the status quo of the corporate governance system in China. In order to improve the effectiveness of corporate governance of Chinese‐listed companies, it is imperative to restructure roles of the government, restrict hands of controlling shareholders, enhance independence of the board of directors, reform the supervisory board, set up independent directors‐dominated sub‐committees and align the interests of managers with those of the shareholders.Research limitations/implicationsThis paper only investigates Chinese‐listed companies because of data availability.Practical implicationsIt has implications for policy makers in China insofar as it offers evidence concerning ownership structure and corporate governance of Chinese‐listed companies. It also helps investors and trading partners (especially foreign ones) understand corporate governance and the investment environment in China.Originality/valueThis study contributes to the literature by extending the mainly US‐based board literature to China where there are important institutional differences in ownership structure and corporate governance system.