State Ownership and Corporate Governance in China: An Executive Career Approach

Tuesday, January 14th, 2014 at 1:22 pm by Li-Wen Lin

Li-Wen Lin, State Ownership and Corporate Governance in China: An Executive Career Approach, 2013 Colum. Bus. L. Rev. 743 (2013).

China’s state-owned enterprises (SOEs) now comprise over sixty percent of the largest 500 companies in China and more than ten percent of Fortune Global 500 companies in the world.  Despite their importance to China’s domestic economy and foreign investment strategy, many governance characteristics of the SOEs remain a black box, including the SOEs’ executive composition and recruitment development.  This Article shifts away from the typical focus on how corporations function (i.e., corporate structure) to an examination of the people in charge.  Such an approach is important for understanding corporate governance and economic development in countries with weak legal institutions.  Using this approach, this Article investigates the legal guidelines for SOE executive recruitment and the evolution of the educational, political, and career attributes of the CEOs of China’s large SOEs over the past decade.  Furthermore, this Article utilizes legal, historical, sociological, and comparative methods to explain the change and stability of executive composition in China’s large SOEs.  In sum, SOE executive recruitment shows an orientation toward politically-bounded and firm-specific professionalism, as well as some faint potential for bottom-up and competition-driven marketization.  SOE recruitment guidelines and the empirical findings in this Article raise questions about the adequacy and capacity of existing international laws and enforcement mechanisms to cope with the rise of Chinese SOEs, the challenges to improving Chinese corporate governance, and the underlying forces that form apparent similarities in elite composition across countries.

Introduction

Author Information

Assistant Professor, University of British Columbia Faculty of Law.