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

摘要

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