Publication: Corporate Governance and Enterprise Reform in China : Building the Institutions of Modern Markets

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Tenev, Stoyan
Zhang, Chunlin
Brefort, Loup
This book explores the short- to medium-term corporate governance issues that China is encountering during the course of corporation and ownership transformation of its enterprise sector. The study looks at companies participating in the two main forms of ownership diversification: listed companies and small and medium enterprises whose ownership structure is dominated by insiders. The focus is on the new mechanisms and stakeholders emerging during the process of ownership diversification and their role in corporate governance. Recommended priorities for action are based on the following guiding principles: 1) Corporate governance scandals in emerging and developed markets indicate that there is no perfect corporate governance model. An effective corporate governance system should be capable of identifying weaknesses before they develop into systemic problems. 2) The institutional mechanisms of corporate governance comprise a system that can employ alternative yet complementary instruments of control to effectuate changes in companies' behavior. Based on these principles, the following areas emerge as recommended priorities for policy action: a) alleviate the negative impact of dominant state ownership on market discipline and on the regulatory capacity of the state; b) building an institutional investor base; and c) strengthening the role of banks in corporate governance.
Tenev, Stoyan; Zhang, Chunlin; Brefort, Loup. 2002. Corporate Governance and Enterprise Reform in China : Building the Institutions of Modern Markets. © Washington, DC: World Bank and the International Finance Corporation. License: CC BY 3.0 IGO.
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