Understanding Corporate Governance Trends in China's Listed Firms: ChinaAMC Report

Insights into Corporate Governance in China's Listed Companies

In a recent survey conducted by China Asset Management Co. (ChinaAMC), findings showcase a critical overview of the corporate governance landscape among onshore listed firms in China. The report, compiled from the responses of 520 A-share listed companies, emphasizes significant trends and preferences within the governance practices of these organizations.

ChinaAMC's ongoing commitment to Environmental, Social, and Governance (ESG) principles is reflected in this report, which is part of a broader initiative that includes annual publications of the China ESG investing White Paper. This particular study provides a snapshot that strives to enhance the understanding of corporate governance issues in China, identifying key areas where improvements can promote better management and investor relations.

Key Findings and Trends

1. Preference for Dividends: One of the most notable findings is that a substantial number of firms (approximately 67%) prefer high-dividend policies over share buybacks. This strategy appears aimed at attracting investors who prioritize dividends, with about 60% of those firms indicating this as their primary concern. In stark contrast, only 4% of respondents pointed to share buybacks as a priority, highlighting a cautious approach towards stock volatility and funding needs of controlling shareholders.

2. Governance Strengthening: The survey indicates that 77% of respondents are inclined to fortify their governance structures through improved internal controls, including revising internal regulations and corporate charters. Additionally, 59% are focusing on enhancing information disclosure, reflecting a compliance-driven mindset that is currently prevalent among A-share companies. However, more profound governance measures, such as increasing board independence and managing related-party transactions, remain largely overlooked. Only minor percentages (6% and 2% respectively) prioritize these actions.

3. Equity Incentives Implementation: The importance of equity incentives in governance and talent retention is recognized, with 48% of firms either implementing or planning to launch such initiatives in the near future. Motivations for these programs include retaining core management talent (89%) and signaling performance expectations to the market (55%). Despite this recognition, there has been a notable decline of 28% in new equity incentives proposals over the last three years, suggesting a need for renewed strategic focus.

4. Approach to Institutional Engagement: Engagement strategies with institutional investors reveal a preference for “soft engagement.” A striking 90% of surveyed companies favor informal approaches, like conducting shareholder meetings and roadshows, over more confrontational measures such as proxy voting (sought by only 50% of respondents). This indicates a tendency toward dialogue rather than direct confrontations, as only 9% are open to shareholder proposals.

5. Focus on Financial Health: Discussions with institutional investors predominantly center around financial health and alignment with national strategies, leaving aspects of ESG largely unaddressed. Only 7% of interactions highlight environmental and social responsibilities, showcasing an area where companies can benefit from increased focus and action.

These insights provided by ChinaAMC emphasize that while there are positive trends regarding investors' preferences and governance strategies, there remains significant room for improvement. The emphasis on compliance and regulatory structures must evolve towards a more holistic integration of governance principles that align with global practices. This report not only paints a picture of the current state of corporate governance in China but also serves as an essential reference for promoting better standards in the capital market.

As ChinaAMC continues its research in this space, the objective remains clear: fostering a sustainable capital market that resonates with international standards, thereby enhancing the overall corporate governance framework within the nation.

About ChinaAMC
Founded in 1998, ChinaAMC has established itself as a leading asset management firm in China, with a total Asset Under Management (AUM) exceeding RMB 3.03 trillion (approximately USD 423.5 billion) as of mid-2025. With extensive experience, ChinaAMC offers diversified investment solutions, catering to various risk profiles and continuing to innovate in the asset management industry.