ABSTRACT
As a socialist country, China should have added reasons to look beyond maximising shareholders’ interests. Nevertheless, under the influence of SWM from the West, the economic analysis of company law, through the lens of agency theory in particular, is increasingly well received by Chinese scholars. They argue the management of large public companies dominated by the state does not optimise economic performance and claim company law and corporate governance is mainly designed to reduce agency costs at all levels. For instance, incentive mechanisms such as share options are regarded as the elixir for aligning the interests of directors with those of shareholders.
