The Evolution of Chinese Corporate Governance

Abstract

This study reviews contemporary corporate governance (CG) in China. This is crucial because of the lack of awareness in the foreign investor community concerning the transparency and reliability of the second-largest economy’s governance policy. The review offered in this study not only contributes to the expanding literature in relation to the Chinese CG model, but also further deepens the understanding of the governance issues concerning businesses operating in China among foreign institutional investors and foreign corporate practitioners. The significance of promoting the transparency and integrity of Chinese firms and capital markets is ensuring that firm assets are used diligently and effectively to safeguard the interests of investors and other relevant stakeholders. Moreover, this study sheds light on the latest developments in the Chinese capital market, regulatory framework, and CG perspective for managers of multinational firms to evaluate their potential direct investment decisions in China. In addition, this study provides a review of existing literature on whether Chinese CG is converging towards or diverging from the Anglo-American model, which may be helpful for the decision-making process of Chinese policymakers and regulators in relation to the formulation of new codes, regulations, and policies in the future.