BRICS Law Journal

Advanced search


Full Text:


China and India face similar challenges in maintaining their aggressive rates of economic growth. While both countries attained economic independence in the late 1940s, each followed a different path in terms of growth. China preferred to open up its economy to foreign direct investment much earlier and only in recent times has it turned towards domestic capital. India, on the other hand, began by attempting to develop local talent and shifted its focus to foreign participation in 1991. This paper examines the politicoeconomic background and the resultant corporate governance paths undertaken by each of these countries. These paths, while diverse, lead to a convergence. In particular, given the nature of concentrated shareholdings in Chinese and Indian companies, by the State in China and by family promoters in India, the second agency problem and the requisite protection of minority shareholders assume considerable importance in both jurisdictions. However, given the nature of corporate governance norms having been transplanted from advanced economies to emerging economies, this convergence may not be suitable or even desirable. This paper posits that emerging economies such as China and India ought to develop and implement corporate governance norms that are separate from those of advanced economies to combat the unique issues arising out of shareholding patterns at home.

About the Author

A. Majumdar
O.P. Jindal Global University

Arjya Majumdar – Associate Professor, Jindal Global Law School, Director, Office of Academic Planning, Coordination and Interdisciplinarity

Sonipat, Narela Road, Haryana – 131001, NCR of Delhi, New Delhi 


1. Afsharipour A. Directors as Trustees of the Nation? India’s Corporate Governance and Corporate Social Responsibility Reform Efforts, 34(4) Seattle University Law Review 995 (2011).

2. Bainbridge S.M. The Politics of Corporate Governance: Roe’s Strong Managers, Weak Owners, 18(3) Harvard Journal of Law & Public Policy 671 (1995).

3. Bebchuk L.A. & Hamdani A. The Elusive Quest for Global Governance Standards, 157(5) University of Pennsylvania Law Review 1263 (2009).

4. Bebchuk L.A. & Roe M.J. A Theory of Path Dependence in Corporate Ownership and Governance, 52(1) Stanford Law Review 127 (1999).

5. Berkman H. et al. Political Connections and Minority Shareholder Protection: Evidence from Securities Market Regulation in China, 45(6) Journal of Financial and Quantitative Analysis 1391 (2010).

6. Berle A.A. & Means G.C. The Modern Corporation & Private Property (New Brunswick, N.J.: Transaction Publishers, 1991).

7. Bertrand M. et al. Ferreting out Tunneling: An Application to Indian Business Groups, 117(1) Quarterly Journal of Economics 121 (2002).

8. Charreaux G. & Desbrieres P. Corporate Governance: Stakeholder Value Versus Shareholder Value, 5(2) Journal of Management & Governance 107 (2001).

9. Farrar J.H. Developing Corporate Governance in Greater China, 25(2) University of New South Wales Law Journal 462 (2002).

10. Feinerman J.V. New Hope for Corporate Governance in China?, The China Quarterly 590 (2007).

11. Hansmann H. & Kraakman R. Agency Problems and Legal Strategies in The Anatomy of Corporate Law: AComparative and Functional Approach 21 (R. Kraakman et al. (eds.), Oxford: Oxford University Press, 2004).

12. Howson N.C. China’s Company Law: One Step Forward, Two Steps Back? A Modest Complaint, 11(1) Columbia Journal of Asian Law 127 (1997).

13. Huang H. Shareholder Derivative Litigation in China: Empirical Findings and Comparative Analysis, 27 Banking and Finance Law Review 619 (2012).

14. Jensen M.C. & Meckling W.H. Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, 3(4) Journal of Financial Economics 305 (1976).

15. Kirby W.C. China Unincorporated: Company Law and Business Enterprise in TwentiethCentury China, 54(1) Journal of Asian Studies 46 (1995).

16. Lu T. et al. How Good Is Corporate Governance in China?, 17(1) China & World Economy 83 (2007).

17. Mitu Gulati G. et al. Connected Contracts, 47 UCLA Law Review 887 (2000).

18. Ong K.T.W. & Baxter C.R. A Comparative Study of the Fundamental Elements of Chinese and English Company Law, 48(1) International & Comparative Law Quarterly 88 (1999).

19. Pant M. & Pattanayak M. Insider Ownership and Firm Value: Evidence from Indian Corporate Sector, 42(16) Economic & Political Weekly 1459 (2007).

20. Sarkar J. & Sarkar S. Large Shareholder Activism in Corporate Governance in Developing Countries: Evidence from India, 1(3) International Review of Finance 161 (2000).

21. Schipani C.A. & Liu J. Corporate Governance in China: Then and Now, Columbia Business Law Review 1 (2002).

22. Seddighi H.R. & Nian W. The Chinese Stock Exchange Market: Operations and Efficiency, 14(11) Applied Financial Economics 785 (2004).

23. Shleifer A. & Vishny R.W. ASurvey of Corporate Governance, 52(2) Journal of Finance 737 (1997).

24. Srinivasan T.M. China and India: Economic Performance, Competition and Cooperation: An Update, 15(4) Journal of Asian Economics 613 (2004).

25. Sun Q. et al. How Does Government Ownership Affect Firm Performance? Evidence from China’s Privatization Experience, 29(1-2) Journal of Business Finance & Accounting 1 (2002).

26. Varottil U. ACautionary Tale of the Transplant Effect on Indian Corporate Governance, 21(1) National Law School of India Review 1 (2009).

27. Wang J. A Comparison of Shareholder Identity and Governance Mechanisms in the Monitoring of CEOs of Listed Companies in China, 21(1) China Economic Review 24 (2010).

For citation:


Views: 239

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 License.

ISSN 2409-9058 (Print)
ISSN 2412-2343 (Online)