A Comparison of Corporate Governance in China and India With the U.S

The Business Review, Cambridge * Vol. 13 * Num. 1 * Summer * 2009 60

A Comparison of Corporate Governance in China and India With the U.S.

Dr. Steven Mintz, California Polytechnic State University, San Luis Obispo, CA

Dr. Sudha Krishnan, California State University, Long Beach, CA

ABSTRACT

We examine corporate governance systems in China and India and compare them to provisions of the Sarbanes-Oxley Act and NYSE listing requirements in the U.S. In China, the influence of the State as the primary investor in state-owned enterprises restricts the degree to which the board of directors can be independent decision-makers and the board has overlapping responsibilities with the board of supervisors. China needs to convince foreign investors that state-owned enterprises and state interference will not impede the efforts of multinationals to operate in that country. In India, the influence of individual shareholders is muted because of the importance of family-owned businesses and government influence in key sectors. Unlike the U.S., in China and India the non-management directors are not required to meet separately with management and the audit committee does not have to meet separately with management or the external auditors. The requirement in China and India to comply or explain deviations from corporate governance provisions is stronger than in the U.S. which only has a compliance certification requirement. However, in both China and India the implementation and enforcement of corporate governance provisions has been restrained due to overlapping responsibilities of regulatory authorities and a lack of enforcement.

INTRODUCTION

Corporate governance plays an essential role in promoting confidence in international markets. The globalization of business and need for access to international markets create a demand for strong corporate governance systems. According to a 2002 McKinsey investor opinion survey, investors who were open to paying premiums for shares were, on average, willing to pay a 25 percent premium for well-governed Chinese firms and a 23 percent premium for well-governed Indian firms (Barton et al., 2004).

To be effective, corporate governance principles should emphasize conducting business and managing the company in a manner that promotes ethical and honest behavior, compliance with applicable laws and regulations, effective management of the companys resources and risks, and accountability of persons within the organization. The role of the board of directors and executive officers once they have agreed on the principles is to set the appropriate ethical tone for the company and communicate these principles throughout the organization. Without an ethical organization culture, it is unlikely that the corporate governance systems will be effective.

This paper examines corporate governance changes in China and India. China and India were chosen for this study because of their rapid economic development and need for strong corporate governance systems to support international investment. The purpose of this paper is to compare corporate governance systems in China and India with regulations in the U.S. under the Sarbanes-Oxley Act of 2002 (SOA) and New York Stock Exchange (NYSE) listing requirements, and to identify differences in systems. We also evaluate the usefulness of recent changes in China and India and identify the implications for the continued growth and development of market economies in these countries.

CORPORATE GOVERNANCE IN THE U.S.

The corporate governance rules in the U.S. are designed to protect the interests of shareholders that may include individual owners of stock, companies owning and/or controlling corporate entities, and institutional investors such as the California Public Retirement System (CalPERS). The Securities and Exchange Commission (SEC) establishes accounting and financial reporting rules for publicly-owned companies in the U.S. while the Public Company Accounting Oversight Board (PCAOB) that was established by the Sarbanes-Oxley Act of 2002 (SOA) oversees public company audits and reports to the SEC. The Act requires that a majority of the members of the board of directors should be independent of management. Other provisions are addressed below.


Sarbanes-Oxley Act 1. All members of the audit committee should be independent of management. 2. One member of the audit committee must possess financial expertise. 3. The audit committee appoints the external auditors, reviews and resolves differences between the auditors and

management, reviews internal controls, and reviews major changes in accounting methods. 4. Under Section 302 of the Act, the CEO and CFO must certify in a statement that accompanies the audit report the

appropriateness of the financial statements and disclosures and that they fairly present, in all material respects, the operations and financial condition of the company. A violation of this provision must be knowing and intentional to give rise to liability.

5. Under Section 404, management should review internal controls and the auditors should independently assess its operation and issue a report that is part of an integrated audit of the financial statements.

New York Stock Exchange Listing Requirements

Since the focus of this paper is the corporate development of entities in China and India, and some of these entities are currently or will apply to be listed on the NYSE, it is important to use the listing requirements as part of the comparative analysis. What follows are the final corporate governance rules of the New York Stock Exchange (2003) approved by the SEC on November 4, 2003. Companies listed on the Exchange must comply with standards regarding corporate governance as codified in Section 303A.

1. Listed companies must have a majority of independent directors. 2. To empower non-management directors to serve as a more effective check on management, they must meet at regularly scheduled

executive sessions without management. Non-management directors are all those who are not company officers and include such directors who are not independent by virtue of a material relationship, former status or family membership, or for any other reason.

3. Listed companies must have an audit committee with a minimum of three members all of whom are independent of management and the entity.

4. The audit committee should meet separately, periodically, with management, internal auditors (or other personnel responsible for the internal audit function) and independent auditors.

5. The committee should review with the independent auditor any audit problems or difficulties and managements response. 6. The committee should report regularly to the board of directors. 7. Each listed company must have an internal audit function. 8. Each listed company CEO must certify to the NYSE each year to not being aware of any violation by the company of NYSE

corporate governance listing standards. 9. Listed companies must adopt and disclose corporate governance guidelines. 10. Listed foreign private issuers must disclose significant differences in corporate governance practices from those followed by

domestic companies under NYSE listing standards.

CORPORATE GOVERNANCE IN CHINA In China, the traditional State-owned enterprise (SOE) has been undergoing a process of corporate

development since 1984 when these enterprises were encouraged to expand production and earn profits. Under the State-owned Industrial Enterprises (SOEs) Law of China that was adopted in 1988, the traditional model of state-owned and state-managed enterprises became two-fold: state ownership of property with management rights in SOEs separated out. Compared with traditional SOEs, the ownership structure of SOE-type corporations includes better defined shareholder rights than its traditional counterpart along with increased efficiency and accountability.

In China today, the most important legal sources of corporate governance rules are two laws: The

Corporate Law (1993) and the Securities Law (1988). Corporate Law provides the legal foundation to transform SOEs into different business corporations, including wholly State-owned corporations, closely held corporations, and publicly held corporations. The focus of Chinas reform of SOEs shifted to corporate governance in 2003, after designating a specified investor representing the rights of state-owned assets. The State-owned Assets Supervision and Administration Commission of the State Council (SASAC) was established, serving as the investor of Chinas then 189 major SOEs.

Governance Structures

The Chinese Securities Regulatory Commission (CSRC) carries out some of the same functions as the SEC in the U.S. The CSRC Code of Corporate Governance for Listed Companies in China (CSRC 2001) provides a measuring stick for corporate governance practices. The Company Law requires corporations to form three statutory and indispensable corporate governing bodies: (1) the shareholders, acting as a body at the general meeting; (2) the board of directors; and (3) the board of supervisors. The Law also provides for the positions of the chair of the board of directors and the chief executive officer. Companies that seek a listing on a stock exchange are required to


adopt sound corporate governance practices, such as the inclusion of independent directors on the board. Rajagopalan and Zhang (2008) point out that the Chinese government controls about 70 percent of the stakes of publicly listed companies on these exchanges. The government still exerts considerable influence over the operations of Chinese companies even as the country moves toward a western form of capitalism.

According to the China Corporate Governance Survey published by the Centre for Financial Market Integrity (2007), a key component of Chinas corporate governance reform is the privatization of SOEs. More than 80 percent of the SOEs are being transformed into corporate entities under the Company Law to facilitate stock exchange listing. SOEs consume close to 90 percent of 1,400 listed companies in China. The Survey notes the following corporate governance challenges for SOEs that pursue privatization.

1. Management teams with continuing links to the Chinese government. 2. State-dominated decision-making that creates conflicts with private shareholders. 3. Overlapping bodies of control in the hands of the board of directors and board of supervisors. 4. Reporting practices that are more often focused on meeting the needs of the major shareholder (i.e., the State) rather than the needs

of investors. Chinas two-tier structure of board governance is patterned after the German governance system, with a

board of directors and a supervisory board. The board of directors is the main decision-making authority and its members work closely with management on the day-to-day operations of the company. Conversely, the supervisory board is an independent board that monitors the executive management and the board of directors. The Centre for Financial Market Integrity (2007) identifies the roles of the board of directors and the supervisory board as follows:

1. The board of director responsibilities follow the Anglo-Saxon model of corporate governance, where the board oversees and aids management decision making.

2. Similar to practices followed in the UK and the U.S., guidelines issued by the CSRC require that at least one-third of the directors on the board be independent.

3. The board of directors is the main decision-making authority, with the supervisory board designated with legal powers to overturn decisions made by the board of directors.

Lu (2003) notes in a survey conducted for the Chinese Center for Corporate Governance that the factors

affecting the independence of board members in China differ from those in the U.S. Many directors find it difficult to stick by their positions for fear of upsetting others in the governance process. Because the overwhelming majority of independent directors are recommended by major stockholders or executive directors, it is unlikely that independent directors will oppose major shareholder or executive director positions. In China where personal relationships are treasured it is essential for most independent directors to maintain these relationships to honor their obligations. These findings tend to justify existing doubts about the independence of independent directors in China.

The board is accountable to the shareholders and should carry out its responsibilities in accordance with the

law. The members of the board of directors in the U.S. also are accountable to the stockholders but mostly as a formality since it is difficult for the shareholders to propose an alternative slate of directors. However, institutional investors often act to represent individual shareholder interests. In China, institutional investor participation in corporate governance is lacking and an increased role might help to strengthen corporate governance practices and enhance investor confidence.

Independence of board members is emphasized not only from management, but also from controlling

shareholders. The overlapping responsibilities of the board of directors and supervisory board make it difficult to maintain the appearance of independence. Moreover, there is no requirement for non-management directors to meet separately without management perhaps because of cultural considerations that might imply a level of mistrust.

Rajagopalan and Zhang (2008) point out that listed companies in China should have a board of supervisors

with 33 percent employee representation. The authors note that because employee members of the board of supervisors have reporting relationships with senior managers who conduct performance evaluations and make promotion and remuneration decisions, it is difficult for these members to play an independent role.

Xiao et al. (2004) report their findings of a study of Chinese listed companies to determine the role of the

supervisory board. The board performs one of four roles: an honored guest, a friendly adviser, a censored watchdog, or an independent watchdog. The role depends on a variety of factors including characteristics of the board, power relations between the board of directors and the supervisory board, shareholding structure, the influence of the


Communist Party of China and government, the role of the independent directors, and the requirements of the corporate law. The authors conclude that a useful supervisory board is one that serves as an independent watchdog. However, in most of the surveyed companies the board played one of the other three roles.

The Chinese Corporate Code (CRSC 2001) provides that audit committees should (1) recommend the

engagement or replacement of the external auditor; (2) review the internal audit system; (3) oversee the interaction between the companys internal and external auditors; (4) oversee the financial information and disclosures; and (5) monitor the companys internal controls. There is no requirement for an internal control report by management or separate meetings between the audit committee and management or the external auditors. Otherwise, the role and responsibilities of the audit committee in corporate governance of Chinese companies is similar to that under the SOA except that the overall responsibility for the oversight of corporate governance mechanisms is not unified in one committee but divided instead among shareholders and the board of directors. Reforms of Governance Systems in China

Schipani and Lui (2002) identify the key issues in building sound corporate governance and corporate autonomy such as disassociating business corporations from government agencies, reducing government intervention in business affairs, and substantially liberalizing corporate business activities from government control. As agents of the State shareholder, government agencies should be permitted to exercise shareholders rights on behalf of the State shareholder but should not interfere in the daily corporate management or intervene in a lawful corporate decision-making process. Eventually, government agencies should fully disassociate themselves from the SOE corporations under their control. This may be the most difficult goal to accomplish in China as state involvement in enterprise management has been embedded in the culture for many years. However, it is a crucial step if China is to move more toward a truly market-oriented economy.

The CRSC Code requires listed companies to include all information that might affect decision-making by

shareholders and stakeholders. This includes information on the composition of the board of directors and supervisory board and controlling shareholders interests. There is a comply or explain rule in the CRSC Code similar to the comply or explain requirement in the European Union (EU). The rule attempts to reconcile the objective of promoting good corporate governance practices in the market with the need to ensure the necessary flexibility for companies. The CRSC rule requires all listed companies to disclose the gap between their existing practices and the recommendations in the Code, reasons for any gap, and plans to close the gap. However, there is no penalty for failing to disclose the gap or requirement that the company must do so.

RateFinancials Inc (2007), an independent research firm, studied corporate governance in publicly-traded

Chinese companies whose American Depository Shares are traded on the NYSE and found that the ten largest Chinese companies by market capitalization received Poor or Very Poor ratings for their accounting, quality of earnings, and governance. These results are not surprising given the continued role of the government in corporate affairs as reflected by the position of the State shareholder and the overlapping responsibilities of executives, the board of directors, and board of supervisors. Moreover, while sound corporate governance principles exist in China, implementation and effectiveness is lacking.

CORPORATE GOVERNANCE IN INDIA

Corporate governance gained importance as Indian companies started raising funds in foreign markets in the 1990s. Unlike China where corporate governance rules were a result of the Corporate Code, the corporate governance rules in India were first introduced by a series of committees set up by the Securities and Exchange Board of India (SEBI), the Central Bank of India, and the Ministry of Finance. The goal was to make the rules mandatory by changing the Companies Act of 1956 and the listing agreements of the stock exchanges.

The first set of governance provisions were set out in the Confederation of Indian Industry (CII) Handbook Corporate Governance: A Code (1998). These provisions were voluntary and include recommendations for independent non-executive directors (NEDs) and an audit committee. It was also suggested that CEOs and CFOs should sign a compliance certificate related to the financial statements, making them responsible for the accuracy of the financial statements. The following discussions of committee reports reflect actions taken by the Indian government to introduce corporate governance regulations.


Corporate Governance Regulations The Kumar Mangalam Birla Committee on Corporate Governance (2000) made mandatory and non-

mandatory suggestions including that one half of the Board must be comprised of independent NEDs. The committee also recommends that a qualified and independent audit committee should be set up by the board. The audit committee should have a minimum of three NEDs with the majority being independent, and at least one director should have accounting and financial knowledge. There is no requirement for the audit committee to meet with management or the external auditors. The Birla report makes Management Discussion and Analysis (MD&A) mandatory in financial reports and it calls for an internal control report. However, there is no requirement for the external auditors to review the report and make an independent assessment as required by the SOA. An important suggestion is that there should be a separate section on corporate governance compliance in the annual report highlighting non-compliance with any of the mandatory recommendations and the reasons thereof. The auditors should also attest to the compliance of the corporate governance recommendations and issue a certificate to the relevant stock exchange.

The Narayana Moorthy Committee (2003) was set up by the SEBI to help implement the recommendations

of the Birla Committee by developing amendments to the listing agreements of companies with stock exchanges. The report of the Committee resulted in the amendment of Clause 49 of the listing agreements in 2003. The Naresh Chandra Committee (2003) issued a report on the role of external auditors and whether an organization such as the PCAOB is needed in India. The Committee recommends that the annual accounts have to be certified by the CEO and CFO.

The JJ Irani Committee Report (2005) suggests major amendments to the Companies Act 1956 including a

definition for independent director. An independent director is defined as a non-executive director of the company who does not have any material financial or transactional relationship with the company, its promoters, management, holding company or any associate company. None of the directors relatives can also have any such relationship. The director or his relatives cannot be employees of the company, the statutory audit firm, internal audit firm or consulting firm. They cannot hold more than 2 percent of the shares of the company.

Clause 49 requires that if the chairman is not independent (executive chairman), then 50 percent of the

board should be independent. If the chairman is a non-executive, then only one-third of the board members need to be independent. The Irani Report suggests that it is acceptable for one-third of the board members to be independent regardless of the independence of the chairman. There is no requirement for non-management directors to meet without management.

Implementation of Corporate Governance Standards

Though the corporate governance recommendations by all the committees were impressive and significantly increased voluntary standards in India, there are serious problems in implementation. The CII Handbook is voluntary and has not been adopted by many companies. The process of implementation began when the listing agreements were amended. Listed companies have to follow Clause 49 of the listing agreement that was phased in between 2001 and 2005. The Birla Committee recommendations for an independent board of directors, audit committees, and CEO/CFO certifications have been incorporated into Clause 49. Companies now file a corporate governance compliance report with the stock exchanges. Currently, the JJ Irani Report on the amendment of the Companies Act is being discussed. The government of India has set up a National Foundation for Corporate Governance to provide a framework for best practices and foster a culture for promoting good governance.

In its report on corporate governance codes in 30 countries titled Report on the Observance of Standards and Codes (ROSC), the World Bank (2004) notes that a significant problem with corporate governance in India is the institutional framework resulting in regulatory overlap that weakens enforcement. The report suggests a more streamlined approach and increased fines for violations that would deter fraud. Also, the report documents major gaps and lapses in the implementation of governance rules.

Indian companies such as Infosys Technologies Reliance Industries have voluntarily implemented most of

the recommendations of the various Committees. Notably, these companies have a strong international presence and are listed on the NYSE. The NYSE requires that listed international companies should follow the same corporate governance standards imposed on U.S. companies. Therefore, it is not surprising to find the larger Indian companies moving in this direction. However, The Financial Express (2007) quotes a SEBI finding that a lack of compliance with clause 49 exists thereby preventing compliance with listing requirements.


A survey by Balasubramanium et al. (2008) indicates that many of the governance requirements need to be

better implemented but enforcement of international compliance is weak and Indian companies are only now starting to conform. The Business Standard (2009) India news service points out that the current scandal at Satyam Computers has forced the SEBI to review Clause 49 with a view to increase the powers of independent directors and disclosure requirements. Though the company was compliant with the governance requirements, the NEDs did not seem to question any actions of management.

The profile of investors and their participation in assessing management in Indian companies is quite

different from those in the U.S. or China. Institutional investors in India do not have a significant role in assessing management of a company since they lack industry knowledge and typically are not held responsible for the performance of a portfolio. Unlike the U.S., India does not have huge pension funds that are activist shareholders independent of management. In recent years, foreign institutional investors and private investor groups have been more successful in placing their nominees on the board of directors, although this is due more to negotiations with management rather than representing general shareholders.

An important issue in India is the lack of independent members of the board of directors in practice,

notwithstanding requirements to the contrary. Many companies are traditionally owned by families whose members are part of management as well as the board of directors, making it difficult to have a level of independence that serves as a check on management behavior. According to Rajagopalan and Zhang (2008), 45 percent of all Indian companies are family controlled.

Table 1 presents a summary of corporate governance provisions in the U.S. that are used as a basis for

comparison with those in China and India. We focus the discussion on differences in these provisions.

Table 1 Governance Structures in the U.S., China and India Criteria U.S. China India

Regulation Sarbanes Oxley Act (SOA), SEC, and NYSE listing requirements

Corporate Law 1993, Securities Law 1998, CSRC

Companies Act 1956, Listing Agreements with Stock Exchanges

Applicability of corporate governance rules

Public companies Publicly held corporations that can be listed or non-listed.

Listed companies

Shareholders and institutional investors

Individuals and companies; important role for institutional investors.

State investor in SOEs; some outside shareholder ownership; institutional investors lacking.

Part family, part financial institution ownership; government ownership in key sectors; some public ownership; lack of significant role for institutional investors.

Board of Directors and Supervisors

Majority of independent directors. Non-management directors meet without management.

At least 33% independent directors. No requirement for non-management directors to meet without management. Supervisory Board can overturn director decisions.

Between 33%-50% independent directors. No requirement for separate meeting of non-management directors. Family-owned businesses influence independence.

Audit Committee At least 3 independent directors. Meet separately with management and independent auditors. Resolve disagreements between management and auditors on accounting issues. Review internal controls.

Majority of independent directors including the chair. Committee reviews internal audit and controls and oversees financial disclosures. Not required to meet separately with management or auditors.

Majority of independent directors. At least 3 non-executive directors. Chair an independent director and oversees the financial reporting. Not required to meet separately with management or auditors.

Certification of financial statements by management

Certification required by CEOs and CFOs.

Does not address this issue. CEOs and CFOs sign a compliance statement making them responsible for the accuracy of the statements; certification recommended.

Internal control report Prepared by management; auditors independently assess report.

Not addressed by regulations. Part of MD&A but no requirement for auditor assessment.

Corporate governance report

Disclosure of corporate governance guidelines; CEO certification. Listed foreign companies must disclose practices that do not comply with U.S. requirements.

Comply or explain gaps between existing practices and recommendations in the Code; no penalty for failing to do so.

Comply or explain noncompliance with mandatory recommendations. External auditors issue a certificate of assessment of compliance with corporate governance rules.


COMPARING CHINA AND INDIA TO THE U.S. China vs. U.S.

It may appear on the surface that many similarities exist between the U.S. and Chinese systems. China has instituted some of the same reforms that are required in the U.S. by the SOA. However, significant differences still exist including:

1.The role of the State (SASAC) as an investor in Chinas corporate SOEs. 2.Institutional shareholders do not have an important role in governance. 3.Two-tier system of oversight with overlapping responsibilities of both the supervisory board and the board of directors, and the

board of directors and management. 4.No requirement for separate meetings of non-management directors without management or for the audit committee to meet

separately with management and the external auditors. 5.All audit committee members should be independent in the U.S.; only the chair need be independent in China with a majority of

independent directors on the committee. 6.No required certification of financial statements by management. 7.No requirement for an internal control report. 8.Comply or explain gaps between existing corporate governance practices and recommendations in the Corporate Code; no penalty

for failing to do so. In the U.S., CEOs must certify compliance with corporate governance guidelines of the NYSE.

The most significant issue with respect to corporate governance in China is enforcement of the many provisions that already exist in the law. Even though China has adopted many of the principles of corporate governance followed in the U.S. and EU, there is no guarantee that SOEs and public companies will implement them in the best interests of investors given the critical role of the state representative-shareholders and the government. India vs. U.S.

There are many similarities between corporate governance systems in the U.S. and India, probably due to the long-standing influence of the UK in India. Some corporate governance recommendations in India go further than those in the U.S. including the need for a corporate governance report and the comply or explain requirement with corporate governance provisions in Clause 49. The following are differences that exist between the two sets of standards.

1. Overlapping committee recommendations and requirements that are being incorporated into listing agreements makes for an unwieldy institutional framework.

2. More diverse share ownership including family and some government-ownership. 3. Institutional investors do not have a significant role in governance. 4. Only between 33 percent and 50 percent of directors need to be independent whereas a majority is required in the U.S. 5. Independence of directors can be problematic due to the influence of family businesses. 6. No requirement for separate meetings of non-management directors without management or for the audit committee to meet

separately with management and the external auditors. 7. While the MD&A addresses the internal control report, it does not require auditor assessment. 8. Comply or explain noncompliance with mandatory recommendations. In the U.S., CEOs must certify compliance with corporate

governance guidelines of the NYSE.

The Birla Committee in India has recognized the need for active and independent non-executive directors to serve as a check on the actions of top management. This mirrors the requirement in the U.S. for greater independence of the board of directors and that all members of the audit committee should be independent. The recommendation for financial statement certification, similar to Section 302 of the SOA, also demonstrates the advanced nature of reform efforts in India when compared with China.

India has modernized its corporate governance system more than China and many of its practices are

consistent with U.S. requirements. The key for India now is to ensure the recommendations of the Committees and listing requirements in Clause 49 are implemented and enforced by the SEBI.

SUMMARY AND CONCLUSIONS

This paper compares corporate governance systems in China and India to the U.S. using the SOA and NYSE listing requirements as the basis for comparison. We also assess recent advances in governance in China and India and what is needed to strengthen governance systems in the future.


The role of non-management directors and the audit committee in both China and India is weaker than in the U.S. where the NYSE requires separate meetings of non-management directors without management and for the audit committee to meet separately with management and the external auditors. The comply or explain requirement in China and India goes one step further than in the U.S. that calls for CEO certification with corporate governance provisions but no explanation of any differences. However, in both China and India the implementation and enforcement of corporate governance provisions has been restrained due to overlapping responsibilities of regulatory authorities and a lack of enforcement.

The main issue for China now is to convince foreign investors that state-owned enterprises and state

interference will not impede the efforts of multinationals to operate in that country. For India, it is more a matter of creating the mechanisms to enforce good governance practice as already embodied in various committee reports. In this way, both countries will gain the confidence of international investors and continue to develop financially and economically.

REFERENCES Balasubramanium, B. Black, B. and Khanna, V. (2008). Firm-Level Corporate Governance in Emerging Markets: A Case Study Of India,

Working paper, No FIN-xx-08, University of Texas, McCombs School of Business. Barton, D., Coombes, P. and Wong, S. C-Y. (2004). Asias governance challenge. McKinsey Quarterly, 2: 54-61. Business Standard, January 14, 2009, Satyam scam prompts Clause 49 review, Website: http://www.business-standard.com/india/news/satyam-scam-prompts-clause-49-review/00/45/346123/. Centre for Financial Market Integrity (2007). China Corporate Governance Survey. China Securities Regulatory Commission (CSRC), State Economic and Trade Commission. Code of Corporate Governance for Listed Companies

in China. January 7, 2001, Website: www.csrc.gov.cn/en/jip. CII HandbookCorporate Governance: A Code (1998), Website: http://www.nfcgindia.org/desirable_corporate_governance_cii.pdf. CLSA CG Watch (2007), Website: http://www.clsa.com/public/library/pdf/CLSA_ACGA_CGWatch2007_Extract.pdf. Corporate Law of 1993, Website: www.lawyers.com.cn/lawcom/lawcenter/lawcontent. Financial Express, January 3, 2007 57% BSE Companies yet to comply with Clause 49, Website: http://parkhe.newsvine.com/news/2007/01/05/508334-57. Final NYSE Corporate Governance Rules, November 4, 2003, Website: http://www.nyse.com/pdfs/finalcorpgovrules.pdf. JJ Irani Committee Report. (2005), Website:http://www.mca.gov.in/MinistryWebsite/dca/latestnews/reportofexpertcommittee.html. Kumar Mangalam Birla Committee on Corporate Governance. (2000), Website:http://www.sebi.gov.in/commreport/corpgov.html Lu, J. H. (2003). Corporate Governance in China, A Report for the Center for Corporate Governance, Institute of World Economics and Politics. Narayana Moorthy Committee Report (2003), Website: http://www.sebi.gov.in/commreport/corpgov.pdf. Naresh Chandra Committee Report (2003), Website: http://icai.org/resource_file/11449p752-757.pdf. New York Stock Exchange (NYSE) . Final Corporate Governance Rules (Section 303A.08), November 4, 2003, Website: http://www.nyse.com/pdfs/finalcorpgovrules.pdf. Rajagopalan, N. and Zhang, Y. (2008). Corporate governance reforms in China and India: Challenges and opportunities. Business Horizons 21:

55-64. RateFinancials, Inc., September 20, 2007. NYSE-Traded Chinese Companies Have Poor Earnings Quality and Inadequate Governance,

Website: http://www.ratefinancials.com/images/ChinaCSRnews.pdf. Report of The Narayana Moorthy Committee. (2003), Website: http://www.sebi.gov.in/commreport/corpgov.pdf. Schipani, C. A. and Liu, J. H. (2002), Corporate governance in China: Then and now. Columbia Business Law Review, 1-69. Securities Law of 1998, Website: www.chinaonline.com/refer/legal/laws_regs. World Bank (2004). Report on the Observance of Standards and Codes (ROSC): Corporate Government Assessment: India. Washington, D.C.:

World Bank. Xiao, J. Z., Dahya, J., and Lin, Z. (2004). A grounded theory exposition of the role of the supervisory board in China. British Journal of

Management, 15, 1: 39-55.

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Documents

A Comparison of Corporate Governance in China and India With the U.S