Inefficient American corporate governance under the financial crisis and China's reflections

Abstract

Purpose China has hitherto followed the US model of corporate governance, but recent crises suggest that that might not be the model to follow. This paper aims to consider that proposition. Design/methodology/approach This is a comparative study of US and Chinese systems of corporate governance. Findings Corporate governance is an alien concept for China. The establishment of the China company law system came later than western nations' corporate law system. Since 1992, China has made substantial progress in several areas of corporate governance. It is well known that for nearly a hundred years the American‐style corporate governance mechanism has been the model of the countries in the world. And China also follows the example of American corporate governance. Against the background of the global financial crisis, it is time to reflect upon the model of corporate governance in China. Originality/value The paper invites reflection on existing paths towards good corporate governance in China.

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