China's SOE reform process: an analysis in terms of corporate governance.

Summary SOE reform is an important dimension of China's ongoing economic reform. This transformation has been carried out in different stages such as the modification of the "operations system" (1978-1992), the adoption of modern organizational principles (after 1993) and then the implementation of gradual privatization operations from 1998 onwards using MBOs. This evolution leads progressively to a modernization of corporate governance, a model in which the influence of the state and the employees is still prevalent. The purpose of our thesis, in this context, is centrally to analyze the effectiveness of MBO-type arrangements in managing the agency costs that conventionally result from the differentiation between ownership and control in firms. The analysis conducted in our thesis from this perspective shows that the reform undertaken in China has had paradoxical effects, by improving the incentive mechanisms on the one hand, but without allowing for a better selection of managers on the other. The use of MBOs in privatization processes has certainly reduced agency costs, but has not eroded the power of the state and the problems of insider control. In order to improve the corporate governance system in China, various observations are made in the thesis, concerning the monitoring role of independent directors, the education of private shareholders, the improvement of transparency of corporate disclosure in order to achieve effective internal governance and a fair external competition environment.