...21 IntCorp ch6-2.qxd 27/01/2009 11:59 Page 167 6.2 Corporate Governance in China Neng Liang and Michael Useem Corporate governance in China has undergone significant change during the past three decades as the Chinese economy has liberalized and developed. Prior to the historic reforms initiated in 1978 the economy had been structured as a state-owned, centrally planned economy; practically all enterprises were government or commune owned. Today, many companies are partially or wholly privately owned, and that historic change has brought a sea change in Chinese corporate governance, with securities policies well in place and governing boards well established. The first significant changes in company ownership came in the 1980s as small state-owned enterprises and collectively owned enterprises in rural areas began issuing shares to the public. As the reforms spread to larger enterprises, the rapid increase in companyissued securities led the Chinese government to swiftly create a capital market from scratch. In 1990 it authorized the cities of Shanghai and Shenzhen to establish national stock exchanges. The stock exchanges were tiny at the start: just 14 companies were listed at the outset, and in the early years state agencies and the listing companies kept some two-thirds of the shares out of the market. Company listing and trading volume rapidly increased in 21 IntCorp ch6-2.qxd 27/01/2009 11:59 Page 168 168 ᔡ PROFILES OF...
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...1.What does Applied Corporate Governance mean to you? As for me, Applied Corporate Governance is a subject about the application of mechanisms of management and supervision of a corporation. Rights and responsibilities are distributed to different people in the corporation, such as shareholders, the Board of Directors, managers and so on. Corporation governance also covers the rules and procedures for decision making of corporate affairs. Besides, it also includes the whole control structure of the corporation. 2.Which are the top 3 most important institutions for the Capital Markets in HK, and why? Securities & Futures Commission (SFC), Office of the Commissioner of Insurance (OCI) and Hong Kong Monetary Authority (HKMA) The Securities and Futures Commission (SFC) of Hong Kong regulates the securities and futures markets in Hong Kong. Its responsibility is to ensure the order of security and future markets in Hong Kong, to protect the rights of investors and to promote Hong Kong as a key financial center both in China and all over the world. Office of the Commissioner of Insurance (OCI) regulates the insurance in Hong Kong. According to the Insurance Companies Ordinance, the primary objective of OCI is to supervise the financial conditions and operations of authorized insurers, and to facilitate the development of the insurance industry. The Hong Kong Monetary Authority (HKMA) is the currency board of Hong Kong. According to the Exchange Fund Ordinance, the primary...
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... does China. Berofe 2000, state-owned enterprises was never to float shares in the foreign exchanges, but the first time a state-owned enterprise had initial public offering in foreign exchanges is a oil and gas industry which has a huge impact on China’s economic development rather than others. I think the big change about corporate governance in China is for a purpose which is to become a member of the WTO. In order to obey the WTO’s regulations,China has no choice but to open up the economy to foreign companies and put itself to international capital markets, so they realize the importance of corporate governance. Although China reformed the corporate governance to catch up with international standards,it is still a lot of differences between both. In China, party committees system is the world famous,it is very common to find the party committees who always play the important role in any state-owned enterprises By doing so, the Communists can supervise any business activities and take action to deal instantly. Besides,former and existing supervising government departments also have had a tremendous influence on the investment decisions of SOEs. The key point of this two differences is China will not let any problems about ownership happened with supervising. For the foreign companies, this two uniques in China are so hard to believe. Other than this two uniques, there are many questions about PetroChina’s corporate governance. First...
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...INTRODUCTION Corporate Governance / PUNB 413 students are required to prepare an individual assignment which is includes preparing summary of at least two articles that related to ISSUES IN CORPORATE GOVERNANCE focusing on Directors Remuneration and CEO Compensation. The article that I selected is mainly focus on Directors Remuneration, Corporate Performance, Board Characteristics and factors that influence in determining the Directors Remuneration and CEO compensation. This assignment plays a vital role in developing our understanding and providing a clear picture on Corporate Governance in real world’s perspective. ARTICLE 1: Board Compensation Structure and Firm Performance Ivan E. Brick, Oded Palmon, and John K. Wald January 15, 2003 SUMMARY: The article is mainly focused on the factors that influence Director’s compensation structure. The factors that influences the determination of the Director’s compensation structure are firms, CEO and governance structure characteristics. In addition, the article also identifying the significant relationship between the Directors’s compensation and firm performance and the consistency of the structure on firm value maximization. The impact of the compensation structure towards firm performance is mainly in changes in Q, ROA performance, future ROA and pay performance sensitivity. PROBLEM STATEMENT: Firm Performance Director’s Compensation Structure ...
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...Abstract This paper has the aim to deep understand the typical problems of the Corporate Governance of China's State-Owned Enterprises (SOEs) and how, during the years the role of the Chinese government is changed. In particular it will discusses Chinese corporate governance in this narrow sense and attempts to explain the political core function of Party Organization. Moreover it will analyze a real case: “Sinosteel Corporation”. This company was created and projected by the Chinese government with the aim to be the leader in its sector. Its corporate governance is deeply influenced by the party consequently by the Chinese government, which contributed to its establishment and growth through several government-subsidies. Key words: China’s SOEs, Governance Structure, the CCP organization, internal control mechanism, Sinosteel. Abbreviations: CCP, China Communist Party; SOEs, State-Owned Enterprises; CICSC, China Internal Control Standards Committee; SASAC, State-owned Assets Supervision and Administration Commission; PSC, Party Standing Committee; CPCC, China Party Central Committee; Introduction The definition of corporate governance in China refers to the system that regulates the multiple relationships between all the parties with interests in a business organization, typically underlying the shareholders as a predominantly important group. However in practise corporate governance focus mainly on the agency problems in particular within two kinds of firms. The...
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...State-Owned-Enterprise Governance in China: the Role of the State LL.M. Long Paper Harvard Law School Supervised by Prof. Reinier Kraakman and Mark Roe April 2012 Oversea Listing and State-Owned-Enterprise Governance in China: the Role of the State Yinzhi Miao Abstract: There are both considerate horizontal and vertical governance problems in the Chinese state-owned-enterprises (SOEs). Due to their privileged positions in the political economy, traditional institutions of corporate governance are far from perfect. Thus the value of oversea listing as a governance mechanism is highlighted, and that could be better revealed by a deeper analysis of the benefit-and-cost balance by the government which controls the SOEs. However, effective as it is, oversea listing could not be a marvelous antidote to all governance ills. Further, as the two major governance disasters of oversea listed SOEs shows, if the government lacks a proper self-positioning, nontrivial negative implications will be brought to SOEs governance via oversea listing. The ultimate function of corporate governance in SOEs thus relies heavily on public governance. Key words: state-owned-enterprises, oversea listing, corporate China governance, 2 Table of contents I. Introduction ....................................................................................................................4 II. The Governance problems of Chinese SOEs and the limitations of traditional governance problems ..........
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...International Journal of Accounting & Information Management The role of corporate governance in convergence with IFRS: evidence from China Yu Chen Zabihollah Rezaee Downloaded by UNIVERSITI MALAYSIA SABAH At 05:16 06 October 2015 (PT) Article information: To cite this document: Yu Chen Zabihollah Rezaee, (2012),"The role of corporate governance in convergence with IFRS: evidence from China", International Journal of Accounting & Information Management, Vol. 20 Iss 2 pp. 171 - 188 Permanent link to this document: http://dx.doi.org/10.1108/18347641211218470 Downloaded on: 06 October 2015, At: 05:16 (PT) References: this document contains references to 50 other documents. To copy this document: permissions@emeraldinsight.com The fulltext of this document has been downloaded 1824 times since 2012* Users who downloaded this article also downloaded: Songlan Peng, Kathryn Bewley, (2010),"Adaptability to fair value accounting in an emerging economy: A case study of China's IFRS convergence", Accounting, Auditing & Accountability Journal, Vol. 23 Iss 8 pp. 982-1011 http://dx.doi.org/10.1108/09513571011092529 Randy Moser, (2014),"IFRS and convergence in China and the USA", Journal of Technology Management in China, Vol. 9 Iss 1 pp. 56-66 http://dx.doi.org/10.1108/JTMC-12-2013-0042 Ronita D. Singh, Susan Newberry, (2008),"Corporate governance and International Financial Reporting Standard (IFRS): The case of developing countries", Research in Accounting in...
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...International Conference on Education Technology and Information System (ICETIS 2014) Research on Chinese Commercial Banks' Capital Structure Optimization Jianwen ZHENG Wuhan University of Technology,China email:174068598@qq.com Keywords: Commercial Banking, Capital Structure, Optimization, Strategy Abstract. Optimize the capital structure is the fact that the premise of improving corporate governance.This paper describes the status of the capital structure of Chinese commercial banks, analyzes the main problems of Chinese commercial banks supplement existing capital structure, optimization strategies proposed capital structure of commercial banks in China, China's policy of commercial banks and other wealthy significant ownership concentration, such as optimization of innovative recommendations. Introduction The capital structure of the model can have a significant impact on the Company's operating performance.This effect can be divided into two cases: one is the direct impact that the capital structure, the financing risk and the cost of capital can directly affect business performance; while another case is the indirect impact, mainly on the company's first impact on the governance structure, and then have an impact on business performance through the governance structure.The pace of development of China's listed banks initially very slow. Under conditions of economic system reform, the bank's capital structure gradual adjustments, operating performance has ...
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...Overseas listing as a policy tool: Evidence from China’s H-shares Qian Sun a,⇑, Wilson H.S. Tong b, Yujun Wu c a Department of Finance, School of Management, Fudan University, Shanghai 200433, China School of Accounting and Finance, Faculty of Business and Information Systems, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong Special Administrative Region c Wealth Management Institute of Lujiazui, Shanghai 200122, China b a r t i c l e i n f o a b s t r a c t We investigate why the Chinese government chooses to perform share issue privatization (SIP) of its state-owned enterprises (SOEs) in Hong Kong, despite the benefit of facilitating the domestic stock market development if performing SIP in China (Subrahmanyam and Titman, 1999) and the higher cost to list in Hong Kong. We address this issue by arguing that the positive effect of SIPs on the development of the domestic market may have limitations, especially when the domestic market is not well developed and cannot absorb rapid and large-scale SIP activities. To maintain domestic market order, it may be optimal to carry out SIP in overseas markets. Furthermore, by listing shares in developed overseas markets, SOEs from the less developed countries could leverage on the overseas markets’ better accounting, governance, and legal standards. By examining a sample of 92 Chinese firms listed in Hong Kong and the relevant control samples of purely domestically listed Chinese firms during the period of 1993–2006,...
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...Corporate governance Two definitions: 1. ASX CGC: rules, relationship, systems and processes help a company to monitor and assess risk, optimize performance, create value and provide accountability. a) A narrow definition which consistent with agency theory focuses on relationship between company and shareholders. 2. OECD: a system a company can be directed and controlled, specify rights, responsibilities and rules; set and achieve objectives and monitor performance. b) A board definition consider relationship between company and stakeholders 3. Agency theory c) A contract under which one or more person engage another person or persons to perform some service on their behalf d) Agency problem rise because of the conflict of interest between principle and agent e) Three specific problems: i. Managers try to maximize their wealth at the expense of shareholders ii. Tendency for management to focus on short-term performance iii. Different attitude of managers and shareholders towards risk f) Corporate governance structures, policies and relationships can help to overcome these three related agency problems iv. Independent board of directors v. Independent board chair vi. Independent board subcommittees such as audit, remuneration and nomination 4. Stakeholder theory g) Reject the only important relationship is shareholders and managers, but consider...
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...fall of China’s corporate dragon: Kelon and its old and new owners Guy S. Liu and Pei Sun INTRODUCTION The collapse of corporate empires in contemporary capitalist economies tends to be no less dramatic than the vicissitudes of political empires in history. While the political ones often slipped into a less than envious position through a gradual process, in which the decline could be discerned widely by both outside political observers and ordinary people, the sudden collapse of corporate dinosaurs nowadays can take even the closest, longterm corporate analysts by surprise. Unfortunately, this was the case in the example of Kelon, a domestic household appliance manufacturer that once enjoyed the honour of being cited as a typically successful case study on Chinese firms in international business schools. Entitled Kelon: China’s Corporate Dragon,1 the study regarded it as an exemplar of dynamic Chinese firms rising from China’s embracing of the market economy during the 1980s and 1990s.2 The timing of the publication, namely the year 2001, could not have been more embarrassing for both the authors and business school students. Guangdong Kelon Electrical Holdings Co. Ltd shocked investors and equity analysts alike by reporting an unprecedented net loss of RMB 1.5 billion (HK$17 million) in the same year, with appalling scandals of the controlling shareholder’s expropriation of company assets. The rise and fall of Kelon is deeply rooted in its corporate governance system, which...
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...Riordan Corporate Compliance Plan LAW/531 June 11, 2012 James Mc Phail Riordan Corporate Compliance Plan Riordan Manufacturing, Inc. Riordan Manufacturing is a global and international company that produces and sells plastic parts for the beverage manufacturing industry, automotive industry, aircraft manufacturers, and fan manufacturers. Riordan owns four major facilities in the United States Albany, Pontiac, Michigan, and Georgia. In addition, one joint venture located in China, in the town of Hangzhou. Riordan headquartered in San Jose, California is responsible for the creation of new designs, research, and development. The company employs 550 people worldwide, with annual earnings of $46 million. Enterprise liability Riordan currently maintains a corporate compliance plan. However, the company should improve the governance system to manage, control, and protect the company stakeholder’s assets efficiently against potential legal threats. Riordan should implement a strong corporate governance meeting structure that will allow conformance and compliance of new regulations and legal requirements. The implementation of procedures and corporate policies will help the employees to focus and will prevent compliance violations. Both officers and employees must comply with applicable laws and guidelines provided in the corporate policies. Regular reviews of the following governance committees will help to manage the liability of the directors...
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...Jordan Siegel, and Changqi Wu. Perspectives on China's Outward Foreign Direct Investment Randall Morck Bernard Yeung Minyuan Zhao Abstract Recent economic data reveal that, at the infant stage, China’s outward foreign direct investment (FDI) is biased towards tax haven countries and South East Asian countries and are mostly conducted by State controlled enterprises with government sanctioned monopoly status. Further examination of China’s savings rate, corporate ownership structures, and bank dominated capital allocation suggests that, although a surge in China’s outward FDI might be economically sensible, the most active players have incentives to conduct excessive outward FDI while capital constraints limit players that most likely have value-creating FDI opportunities. We then discuss plausible firm-level justifications for China’s outward FDI flow, its importance, and promising avenues for further research. I. Introduction Barely thirty years ago, most would consider China a poor agricultural economy. In 2008 China is hosting the Olympics to signal its emergence as a major economic power. This phenomenal development appropriately draws international business scholars’ attention. One especially curious characteristic of China’s development path is a recent surge in its outward foreign direct investment (FDI). Successful and not-so-successful foreign acquisitions by companies...
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...Corporate Compliance Plan Introduction Having a good corporate compliance plan is essential to all businesses. Without an effective plan a business will have no clear direction. With no direction a business will surely be in legal turmoil. Once in legal turmoil, a business will fail. Business Overview Riordan Manufacturing is a global plastics manufacturer employing 550 people with projected annual earnings of $46 million. The company is wholly owned by Riordan Industries, a Fortune 1000 enterprise with revenues in excess of $1 billion. Its products include plastic beverage containers produced at its plant in Albany, Georgia, custom plastic parts produced at its plant in Pontiac, Michigan, and plastic fan parts produced at its facilities in Hangzhou, China. The company's research and development is done at the corporate headquarters in San Jose. Riordan's major customers are automotive parts manufacturers, aircraft manufacturers, the Department of Defense, beverage makers and bottlers, and appliance manufacturers. Legal Liability of Administration Riordan Manufacturing’s Corporate Compliance plan is for all employees. Compliance with the program starts with the officers and directors of Riordan. All employees of Riordan are expected to follow the set standards. The administration of Riordan is no exception to the set standards. The Corporate Compliance Plan will focus on the liability of the officers and directors of Riordan Manufacturing. Legal Options When legal...
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...Corporate Governance and Accounting Conservatism in China* Donglin Xiaa and Song Zhub,** b School of Economics and Management, Tsinghua University, China School of Economics and Business Administration, Beijing Normal University, China a Abstract A principal-agent relationship exists among creditors, shareholders and management, and information asymmetry among them leads to asymmetric loss functions, which induces conservative accounting. This paper investigates the determinants of accounting conservatism using accrual-based measures and data from 2001 to 2006 in China. We find that a higher degree of leverage, lower level of control of ultimate shareholders and lower level of management ownership lead to more conservative financial reporting. We also find that political concerns and pressures among state-owned enterprises are greater than those among non-state owned enterprises, which leads to more conservative financial reporting among the former. However, a decrease in such concerns leads to a decrease in accounting conservatism. Overall, we find that among the determinants of conservatism in China, debt is the most important, followed by ownership, and that board has little influence. JEL classification: G30; M41 Keywords: Information asymmetry; Agency problem; Accounting conservatism; Political concerns; Corporate governance * We thank George Yang from Chinese University of Hong Kong and participants at CJAR Summer Research Workshop for helpful comments....
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