The Handbook of Board Governance, 2nd Edition

58Boards of Directors of Chinese Companies

David H. Zhu

Associate Professor of Management and Entrepreneurship, W. P. Carey School of Business, Arizona State University

Wei'An Li

Professor of Management and Governance, China Academy of Corporate Governance/Business School, Nankai University

Yaowei Zhang

Associate Professor of Management and Governance, China Academy of Corporate Governance/Business School, Nankai University

Introduction

In July of 2018, Fortune published its latest list of the world's 500 largest companies by revenue, known as the Global 500. This time, China has 120 companies on the list, just behind the United States (126 companies) but way ahead of Japan (52 companies). Among the 120 Chinese companies, about 80 percent are state-owned corporations, but the 20 percent of privately owned (i.e., not owned by the state), publicly traded firms include some familiar names, such as Alibaba and Haier. Although Chinese companies are gaining increasing attention from investors, customers, businesses, and politicians worldwide, only limited research has systematically examined the corporate governance system in China (Useem, Singh, Liang, and Cappelli, 2017, is a notable exception), with particularly scarce coverage of the governance of state-owned firms. Our goal in this chapter is to partially address this issue.

Establishment and Development of the Chinese Board of Directors System

The Chinese corporate governance system has changed substantially over time, especially ...