Venture Capital and the Corporate Governance of Chinese Listed Companies
State-controlled listed companies have always dominated Chinese stock markets. As a result of the rampant scandals related to them, there have been voluminous academic efforts to explore their corporate governance, underpinned by agency costs. However, th
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Lin Zhang
Venture Capital and the Corporate Governance of Chinese Listed Companies
Lin Zhang College of Humanities and Law Shandong University of Science and Technology Qingdao, Shandong, China [email protected]
ISBN 978-1-4614-1280-9 e-ISBN 978-1-4614-1281-6 DOI 10.1007/978-1-4614-1281-6 Springer New York Dordrecht Heidelberg London Library of Congress Control Number: 2011936298 © Springer Science+Business Media, LLC 2012 All rights reserved. This work may not be translated or copied in whole or in part without the written permission of the publisher (Springer Science+Business Media, LLC, 233 Spring Street, New York, NY 10013, USA), except for brief excerpts in connection with reviews or scholarly analysis. Use in connection with any form of information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed is forbidden. The use in this publication of trade names, trademarks, service marks, and similar terms, even if they are not identified as such, is not to be taken as an expression of opinion as to whether or not they are subject to proprietary rights. Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com)
Preface
State-controlled listed companies have always dominated Chinese stock markets. As a result of the rampant scandals related to them, there have been voluminous academic efforts to explore their corporate governance, underpinned by agency costs. However, the attempt to examine it from the perspective of venture capital and adaptive efficiency is still absent. Therefore, this is the research gap filled by this dissertation. During the last 10 years, China has made remarkable progress in the development of its venture capital market. However, the striking expansion of China’s venture capital market cannot cover the embarrassing fact that Chinese domestic venture capital has been marginalized by American competitors. Given the different performance between them, this book hypothesizes that the corporate governance system of Chinese state-controlled listed companies has hampered the presence or the full functioning of the institutional factors which are responsible for the prosperity of American venture capital in Chinese domestic venture capital. With the practice of American venture capital as the mirror, this book empirically demonstrates that Chinese domestic venture capital lacks the four factors related to the success of their American counterparts – large and independent funding, application of incentive mechanisms, efficient exit channels and high-risk tolerance level. More importantly, these defects as a whole are closely linked to the corporate governance of state-controlled listed companies. The findings that the corporate governance of Chinese state-controlled listed companies imposes negative effects on the healthy development of Chinese domestic venture capital and in turn the increase of adaptive efficiency of Chinese society tell us that
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