Corporate governance in Ming & Qing China: evidence from Shanxi (Jin) merchants

Shanxi (Jin) merchants are widely recognized as one of the most successful commercial groups in the Ming & Qing dynasties of China. They gradually built a unified and complete multi-level financial market which promoted the rapid development of early modern China’s finance sector and economy, and they hosted China’s premier financial center. Most accounts suggest their practices were of purely Chinese origin, and represent a remarkable case of parallel economic evolution with the West. This study argues that Shanxi merchants’ success is shown not only in their economic prosperity but also their impressive achievements in management. The success of Shanxi merchants should be attributed to their unique corporate governance model; specifically, their separation of ownership and management, professional manager system, use of personal shares, and joint shareholding system. We argue that their distinguished business ethics still have an extensive influence on China today.