An empirical Taxonomy of SOE governance in transitional China

Abstract. China’s State-Owned Enterprises (SOEs) traditionally have been governed by the Communist Party. Privatization has brought greater numbers of investors who have a stake and demand a voice in how SOEs are managed. Three traditional governance perspectives are agency theory, resource dependence, and institutional theory, but China’s transition introduces several additional governance approaches. Are ‘‘capitalism with Chinese char-acteristics’ ’ and ‘‘bureaucratic entrepreneurialism’ ’ paradoxes? Based on initial interviews of SOE executives, a survey of top managers and board chairs of listed companies, and sub-sequent interviews and observations in select case companies, this paper develop a taxonomy of SOE governance that now exists in China. Two of the approaches represent the extremes of the old state-centered regimes and the new shareholder-centered regimes. Considering China’s historical and cultural contexts coupled with its current stage of economic transi-tion, two additional approaches to corporate governance are to have a vacuum as neither the state nor shareholders dominate or – in unique contrast to other countries – a hybrid of both. Key words: capitalism with Chinese characteristics, governance taxonomy, institutionalism, state-owned enterprises, transition economies Abbreviations: ARBE, accounting regulations for business enterprises; ASBE, accounting standards for business enterprises; FIEs, foreign-invested enterprises; NTCs, new three committees; OTCs, old three committees; SMEs, small and midsize enterprises; SOEs, state-owned enterprises; TVEs, township and village enterprises w Ideas and suggestions were initially provided by Professor Qingrui Xu, the adviser to th