Petrochina Case Analysis
PetroChina Case Analysis
The article “PetroChina: International Corporate Governance with Chinese Characteristics” describes the major concerns about PetroChina’s corporate governance when and after it was listed on NYSE and HKSE, which was the first Chinese state-owned enterprise launched IPO overseas. This paper is based on the information provided by the article and will discuss in three aspects: Firstly, why corporate governance was important for China’s SOEs? Secondly, what were the special problems associated with PetroChina’s corporate governance model and what could be done to improve it? Finally, the postscript: the things I learn from this case study.
Corporate governance is important for companies all around the world
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While the success of PetroChina’s IPO abroad had paved the way for the rest of China’s SOEs to step on the international capital market, a broader question were raised: What China need to do to improve corporate governance of the SOEs like PetroChina? In my opinion, China need to carry on thorough economic and even political reforms, including reduce government intervention of corporate management, solving corruption problem in government and SOEs, improve corporate governance culture in corporations, and construct a well organize capital market. Postcript The case “PetroChina” provided by the HKU mainly focus on the problems with PetroChina’s corporate governance model and the following worries of outside investors. This is actually my first experience of business case study and at first I thought we were going to criticize China’s crippled market economy and clumsy state-owned enterprises, yet unexpectedly, it turned out to be a lesson that taught me to how to think critically when invest in such unique company. PetroChina’s corporate governance model did have its endogenous weaknesses but also significant merits. As it is state-owned, PetroChina suffered problems like low productivity, dual objectives (interest confrontation between the government and minority shareholders), information asymmetry (unwillingness to disclose negative news to shareholders), tunneling operations or corruption, and also principal agent