Property rights developments and productivity gains in China: A law and economics perspective

This chapter presents the stylized models of corporate governance to set the foundation for analysis of the four relationships: relationship with banks, the stock market, the government, and the relationship between managers and employees within the firm. It examines the relationship between enterprises and banks. It also attempts to analyze these issues regarding Chinas private enterprise development. The chapter investigates the relationship between firms and capital markets. It explores the connection between firms and the government, and deals with the relationships within the firm. The chapter presents the conjecture features of corporate governance that are more effective for newly established Chinese private enterprises that will move toward becoming modern corporations. The chapter shows the operation of Chinese firms as well as the socio-economic and historical background of their move toward establishing modern corporations. It focuses on the corporate governance of Chinas private enterprises based on their current characteristics and development environment.