Table of Contents

CHAPTER 1. CORPORATIZATION OF CHINESE SOES 1

1.1 The Agency Problem and U.S. Corporate Law 2

1.2 The Agency Problem in China’s SOEs 4

1.3 Agency Problem in SOEs is Different 8

CHAPTER 2. WHEN THE STATE IS THE CONTROLLING SHAREHOLDER: SHAREHOLDER LITIGATION AS AN EX POST ENFORCEMENT IN CHINA 10

2.1 Shareholder Litigation in the U.S. 17

2.2 Shareholder Litigation in China 25

2.3 Reasons for Weak Legislation 38

2.4 Shareholder Litigation vs. State Controlling Shareholder 47

2.5 The Factors that Influenced Enforcement 70

2.6 Implications and Suggestions 76

Conclusion 92

CHAPTER 3. CONTROL OF SOE MANAGERIAL AGENCY COSTS THROUGH EXECUTIVE COMPENSATION 94

3.1 Current Compensation System 95

3.2 Design of the U.S. Compensation System 100

3.3 Design of SOE Compensation System 105

3.4 Enforcement 130

3.5 Implications & Suggestions 153

Conclusion 164

CHAPTER 4. GOVERNANCE INSTITUTIONS IN SOES 165

4.1 Comments on SOE Governance Institutions 168

4.2 Legal Framework in the U.S. 173

4.3 Legal Framework in China 178

4.4 Enforcement of Governance Institutions 211

4.5 Supervisory Institutions 263

4.6 Employee Governance 301

4.7 Implications & Suggestions 303

Conclusion 311

CHAPTER 5. CONCLUSION 312

REFERENCES 319