Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

The effectiveness of non‐executive directors in Chinese state‐owned enterprises

The effectiveness of non‐executive directors in Chinese state‐owned enterprises Purpose – The primary aim of this paper is to examine whether boards of directors with independent members function as effective corporate governance mechanisms in Chinese State‐Owned Enterprises (SOEs), by analysing four characteristics of non‐executive directors (NEDs) that impact on their effectiveness, namely their degree of independence, information, incentive, and competence. Design/methodology/approach – Being exploratory in nature, the research uses qualitative methods for data collection. It is based on an interpretivist perspective of social sciences, analysing and explaining the factors that influence the effectiveness of NEDs. Findings – The findings indicate that the NED system is weak in China as a result of the concentrated ownership structure, unique business culture, intervention of controlling shareholders and the lack of understanding of the benefits brought by NEDs. Research limitations/implications – The paper examines the salient features of and challenges to the system of NEDs of SOEs in present‐day China. It provides an understanding of how the various perceptions of the board, gathered from in‐depth interviews of corporate directors, leads to new interpretations of board effectiveness. The research, however, is limited owing to a relatively small sample size and the sensitive nature of the information collected. Originality/value – The study aims to fill gaps in the literature and contribute to it by assessing the “real” views and perceptions of NEDs in China in an institutional environment significantly different from that of the USA, the UK and other western economies. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Management Decision Emerald Publishing

The effectiveness of non‐executive directors in Chinese state‐owned enterprises

Nada K. Kakabadse; Hong Yang; Richard Sanders
Management Decision , Volume 48 (7): 17 – Aug 3, 2010
Download PDF
17 pages

Loading next page...
 
/lp/emerald-publishing/the-effectiveness-of-non-executive-directors-in-chinese-state-owned-HqQN0zeAG6
Publisher
Emerald Publishing
Copyright
Copyright © 2010 Emerald Group Publishing Limited. All rights reserved.
ISSN
0025-1747
DOI
10.1108/00251741011068770
Publisher site
See Article on Publisher Site

Abstract

Purpose – The primary aim of this paper is to examine whether boards of directors with independent members function as effective corporate governance mechanisms in Chinese State‐Owned Enterprises (SOEs), by analysing four characteristics of non‐executive directors (NEDs) that impact on their effectiveness, namely their degree of independence, information, incentive, and competence. Design/methodology/approach – Being exploratory in nature, the research uses qualitative methods for data collection. It is based on an interpretivist perspective of social sciences, analysing and explaining the factors that influence the effectiveness of NEDs. Findings – The findings indicate that the NED system is weak in China as a result of the concentrated ownership structure, unique business culture, intervention of controlling shareholders and the lack of understanding of the benefits brought by NEDs. Research limitations/implications – The paper examines the salient features of and challenges to the system of NEDs of SOEs in present‐day China. It provides an understanding of how the various perceptions of the board, gathered from in‐depth interviews of corporate directors, leads to new interpretations of board effectiveness. The research, however, is limited owing to a relatively small sample size and the sensitive nature of the information collected. Originality/value – The study aims to fill gaps in the literature and contribute to it by assessing the “real” views and perceptions of NEDs in China in an institutional environment significantly different from that of the USA, the UK and other western economies.

Journal

Management Decision – Emerald Publishing

Published: Aug 3, 2010

Keywords: China; Boards of directors; Corporate governance

References

  • A theory of friendly boards
    Adams, R.; Ferreira, D.
  • Corporate Governance for the Insurance Industry
    Arab, L.
  • The Modern Corporation and Private Property
    Berle, A.A.; Means, G.C.
  • Ownership and Control
    Blair, M.
  • Corporate governance in China – is economic growth potential hindered by Guanxi ?
    Braendle, U.C.; Gasser, T.; Noll, J.
  • Criticism of Board Intensifies
    Burgess, K.
  • Report of the Committee on the Financial Aspects of Corporate Governance: The Code of Best Practice (Cadbury Code)
    Cadbury, A.
  • Bonding, law enforcement and corporate governance in China
    Cai, H.
  • China Corporate Governance Survey
    CFA Institute
  • The future of China's capital markets and the role of corporate governance
    Cha, L.
  • Political control and performance in China's listed firms
    Chang, E.C.; Wong, S.M.L.
  • Corporate Governance in China
    Chen, J.
  • Does corporate governance matter in China?
    Cheung, Y.‐L.; Jiang, P.; Limpaphayom, P.; Lu, T.
  • Zhongguo Dudong Diaocha Ji Zhidu Fansi (Survey on China's Independent Directors and Reflections on the Institutions)
    China Securities Daily
  • The independent director in Chinese corporate governance
    Clarke, D.C.
  • Chinese corporate governance and prospects for reform
    Ewing, R.D.
  • How ownership and corporate governance influence chief executive pay in China's listed firms
    Firth, M.; Fung, P.M.Y.; Rui, O.M.
  • Five misunderstandings about case‐study research
    Flyvbjerg, B.
  • Cognition and corporate governance: understanding boards of directors as strategic decision‐making groups
    Forbes, D.P.; Milliken, F.J.
  • The Discovery of Grounded Theory: Strategies for Qualitative Research
    Glaser, B.G.; Strauss, A.L.
  • Corporate Governance in China
    Ho, S.S.M.
  • Corporate Governance in China: An Empirical Study of Listed Firms. Department of Accounting, Finance and Economics
    Hovey, M.
  • Leverage, Profitability and the Ownership Structures of Listed Firms in China
    Hovey, M.T.
  • A survey of enterprise reforms in China: the way forward
    Hovey, M.; Naughton, T.
  • The Real Life Guide to Accounting Research
    Humphrey, C.; Lee, B.
  • Board configuration: building better boards
    Ingley, C.B.; Vanderwalt, N.T.
  • Privatization and corporate governance
    Johnson, S.; Shleifer, A.
  • Independent directors and the propensity to smooth earnings: a study of corporate governance in China
    Lai, L.; Tam, H.
  • The changing face of corporate boards
    Lawler, E.; Finegold, D.
  • Financial reform and corporate governance in China
    Leung, E.; Liu, L.; Shen, L.; Taback, K.; Wang, L.
  • Corporatisation and corporate governance in China's economic transition
    Lin, C.
  • A modest proposal for improved corporate governance
    Lipton, M.; Lorsch, J.
  • The rise and fall of China's corporate dragon: Kelon and its old and new owners
    Liu, G.S.; Sun, P.
  • The class of shareholdings and its impacts on corporate performance: a case of state shareholding composition in Chinese public corporations
    Liu, G.S.; Sun, P.
  • Pawns or Potentates? The Reality of America's Corporate Boards
    Lorsch, J.W.; Maclver, E.
  • Defects in China's Independent Director System: A Case Study of Leshan Power Company
    Lu, T.
  • Corporate Governance in China
    Lu, T.
  • The development of corporate governance in China
    Mallin, C.; Rong, X.
  • Corporate governance in transition economies: a case study of two Chinese airlines
    Mar, P.; Young, M.N.
  • History repeats itself: the failure of rational choice models in corporate governance
    Marnet, O.
  • The Chinese government's new approach to ownership and financial control of strategic state‐owned enterprises
    Mattlin, M.
  • Abstract knowing: the case for magic in method
    May, K.A.
  • Corporate governance in Asia: a work in progress
    Moir, J.
  • Conclusions and Key Findings – The Third OECD‐China Policy Dialogue on Corporate Governance
    OECD
  • Outside directors and firm performance during institutional transitions
    Peng, M.W.
  • Corporate governance and state‐owned shares in China listed companies
    Qiang, Q.
  • Corporate governance reforms in China and India: challenges and opportunities
    Rajagopalan, N.; Zhang, Y.
  • Interviews
    Rapley, T.
  • Beyond agency conceptions of the work of the non‐executive director: creating accountability in the boardroom
    Roberts, J.; McNulty, T.; Stiles, P.
  • The international corporate governance developments: the path for China
    Shi, C.
  • Corporate governance with Chinese characteristics
    Shi, S.; Weisert, D.
  • A survey of corporate governance
    Shleifer, A.; Vishny, R.W.
  • An Inquiry into the Nature and Causes of the Wealth of Nations
    Smith, A.
  • Corporate Governance and Accountability
    Solomon, J.
  • Corporate Governance and Accountability
    Solomon, J.
  • Boards at Work: How Directors View Their Roles and Responsiblities
    Stiles, P.; Taylor, B.
  • Financial Globalization, Corporate Governance, and Eastern Europe
    Stulz, R.M.
  • Principal‐principal conflict in the governance of the Chinese public corporation
    Su, Y.; Xu, D.; Phan, P.H.
  • Models of corporate governance for Chinese companies
    Tam, O.K.
  • Ethical issues in the evolution of corporate governance in China
    Tam, O.K.
  • Corporate Governance in China
    Tan, M.N.T.
  • Corporate Governance and Enterprise Reform in China
    Tenev, S.; Zhang, C.
  • China Told to Refine Corporate Governance
    Tucker, S.
  • Sociological Dimensions of China's Economic Transition: Organization, Stratification, and Social Mobility
    Walder, A.G.
  • The strange role of independent directors in a two‐tier board structure of China's listed companies
    Wang, J.Y.
  • Diversity: the key to corporate governance reform
    Wang, W.
  • Holding company risk in China: a final step of state‐owned enterprises reform and an emerging problem of corporate governance
    Watanabe, M.
  • A taxonomy of systems of corporate governance
    Weimer, J.; Pape, J.C.
  • Power and Accountability, The Changing Role of the Corporate Board of Directors
    Williams, H.M.; Shapiro, I.S.
  • Formal convergence or substantial divergence? Evidence from adoption of the independent director system in China
    Yuan, J.
  • How to improve China's enterprise internal control system: based on the perspective of corporate governance
    Yuan, J.; Yuan, C.
  • China's SOE reform: a corporate governance perspective
    Zhang, W.Y.