The Role of Financial Institutions in the Corporate Governance of Listed Chinese Companies

19 Pages Posted: 15 Dec 2009

See all articles by Rongli Yuan

Rongli Yuan

affiliation not provided to SSRN

Jason Zezhong Xiao

Cardiff Business School, Cardiff University

Nikolaos Milonas

National and Kapodistrian University of Athens - Faculty of Economics

Joe Hong Zou

City University of Hong Kong

Date Written: December 2009

Abstract

This paper explores the role of Chinese financial institutions in the corporate governance of listed companies through interviews with both senior managers of financial institutions and board directors of listed companies. Our results show that, while most securities companies are passive investors, a good proportion of the active mutual funds help their portfolio companies prepare financial forecasts, standardize their operations, raise external funds, strengthen their company image in the capital markets, and sometimes intervene in corporate issues. This limited role can be attributed to a number of factors specific to the Chinese context including highly concentrated state ownership, an immature regulatory environment, inadequate transparency and disclosure of financial information, and weak corporate governance within financial institutions themselves. It could also be affected by several other factors that are considered to cause institutional passivity in developed countries such as conflicts of interest, monitoring costs and lack of expertise.

Suggested Citation

Yuan, Rongli and Xiao, Jason Zezhong and Milonas, Nikolaos and Zou, Joe Hong, The Role of Financial Institutions in the Corporate Governance of Listed Chinese Companies (December 2009). British Journal of Management, Vol. 20, Issue 4, pp. 562-580, December 2009. Available at SSRN: https://ssrn.com/abstract=1523419 or http://dx.doi.org/10.1111/j.1467-8551.2008.00602.x

Rongli Yuan (Contact Author)

affiliation not provided to SSRN

No Address Available

Jason Zezhong Xiao

Cardiff Business School, Cardiff University ( email )

Aberconway building
Colum Drive
Cardiff, CF10 3EU
United Kingdom

Nikolaos Milonas

National and Kapodistrian University of Athens - Faculty of Economics ( email )

8 Pesmazoglou street
GR-10559 Athens
Greece

Joe Hong Zou

City University of Hong Kong ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

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