How Good Is Corporate Governance in China?

Based on the revised OECD Principles of Corporate Governance of 2004 and China’sregulatory framework,we develop a corporate governance index (CGI) to measure overallcorporate governance and disclosure practices of the 100 largest listed companies in China.The results show that Chinese companies have been making progress in corporategovernance reform and there is significant difference in CGI between the top and the bottomcompanies’performance.Among the six parts of CGI,Chinese listed companies performbetter in disclosure and transparency,but show weakness in board of supervisor andstakeholders roles.Further tests show that the improvements in corporate governance ofstate-owned enterprises have resulted in some initial signs of success.