Corporate governance is the system by which companies are directed and controlled. Corporate Governance is important because it is part of the institutional infrastructure (laws, regulations, institutions and enforcement mechanisms) underlying sound economic performance. I would like to perform my research on the topic of corporate governance practices in China for the following reasons: The political system in China is unique, not like other democratic countries, the Chinese Communist Party is the sole party in power in China. It is a monolithic, monopolistic ruling party that dominated Chinese political, economic, social and cultural life. Because of this unique political system, the economic structure in China is also different from other countries, such as USA, Canada, Germany and Japan, etc. Before 1980s, China had a planned economy and all enterprises were owned by the central government. Since the 1980s, the Chinese economy has been transformed from a planned economy to a market economy. Today, there are many different forms of ownership that exist in Chinese enterprises, such as private, shareholding, or joint-venture and state owned.
This transformation not only affected on our economic, it also had a huge impact on our daily life. As a Chinese was born and grew up in China, I witnessed this significant change. In the last 30 years, the rate of Chinese economic growth has been almost miraculous, an average of 8 percent growth in GDP per annum. This rapidly expanding led China to be the biggest economy after the United States and most analysts predict China will become the largest economy in the world this century. It is always interesting to know the structure of corporate governance in China under its unique political system. How does corporate governance perform under different forms of ownership in China? Is corporate governance effective in China? What are the key corporate governance problems in China? And evaluate its contribution to the steady economic growth in China. The followings are the list of sources that may answer the above questions: List of Sources
Cheung, Y., Leung, J.P., Limpaphayom, P., & Lu, T. (2010). Corporate governance in China: A step forward. European Financial Management, Retrieved from http://efmaefm.org/Symposium2007/cheung.pdf This study used the Organization of Economic Cooperation and Development (OECD) principles of corporate governance to measure the progress of the corporate governance reform among 100 largest Chinese listed companies. It confirmed that Chinese listed companies have been making progress in corporate governance reform. However, the researchers didn’t find the relationship between market valuation and corporate governance practice or corporate transparency. This study introduced a comprehensive corporate governance index to measure the corporate governance mechanisms in China’s equity markets.
This study is related to my topic in that it provides a broad view of research methods and parameters. These descriptive dimensions provide a starting place for more focused research on specific elements of the topic of interest to me now and in the future. Clark, D. C. (2003).Corporate governance in China: An overview. Retrieved June 3, 2012, from http://ssrn.com/abstract=424885 or http://dx.doi.org/10.2139/ssrn.424885 In this study, the researcher focuses on the enterprises that the majority shares are owned by the state in China. Therefore, the corporate governance laws and institutions that established only realize the most wealth for the state, such as the maintenance of urban employment levels, direct control over sensitive industries, or politically motivated job placement instead of maximizing the economic value of the enterprises.
Current company law gives too much power to controlling shareholders. Therefore, it exploits minority shareholders who have no other way to benefit from their investment. Under current company law, neither state owned enterprises nor private owned can operate efficiently. The limitation of this article is it only discusses Chinese corporate governance on state-owned enterprises and listed companies and attempts to explain some complicated features of its discourse, laws and institutions. This source is related to my topic as it focuses primarily on state-owned enterprises. Theoretic analysis provides a starting place for more focused research on specific topic that interested me now and in the future.
Lin, C., Ma, Y., & Su, D.W. (2009). Corporate governance and firm efficiency: Evidence from China’s publicly listed firms. Retrieved June 8, 2012, from http://warrington.ufl.edu/purc/purcdocs/papers/0819_lin_corporate_governance_