The structure of ownership and corporate governance: The case of Chinese listed companies

Abstract

Modern companies have made a great contribution to the development of the economy. However, the company is not a perfect organization - modern companies, particularly listed companies, suffer from agency problems, in the form of conflicts of interest between management and shareholders, majority shareholders and minority shareholders, and shareholders and other stakeholders. ' These agency problems form the core subject matter of the corporate governance debates that have attracted the attention of governments, international organizations, and scholars in the fields of economics, law, politics, management and other areas. The type of agency problem that arises is determined by the structure of share ownership. Where the structure of share ownership is concentrated, the agency problem takes the form of a conflict of interest between majority shareholders and minority shareholders, whereas where the structure of share ownership is dispersed the agency problem takes the form of a conflict between management and shareholders. The appropriate model of corporate governance follows from this. The structure of share ownership is concentrated in some countries or regions of the world and dispersed in others, depending on the economic, political, legal, historical and cultural circumstances. There is no single perfect model of corporate governance, but different models appropriate to different countries or regions, in the light of the structure of share ownership. The case of Chinese listed companies will be examined to illustrate the argument, and in particular to contrast it with the "law matters" and the "politics matters" theories. The major problem of corporate governance in Chinese listed companies is the agency problem characteristic of concentrated ownership, of a conflict between the majority shareholder and minority shareholders. The problem in China is compounded by the fact that the majority shareholder is in most cases the state. Although the structure of ownership is affected by many factors, such as the economy, politics, law, culture and history, today the main determinant of the development of the economy will be the change of the structure of share ownership from concentrated share ownership by the state to relatively dispersed ownership.