Shuping Li, Hong Kong Polytechnic University

Martin Conyon, Bentley University

Hanqing Chevy Fang, Missouri University of Science and Technology

Junxiong Fang, Zhejiang University of Finance & Economics

Lerong He, State University of New York at Geneseo

Michael Jensen and William Meckling's article, 'Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure', published in the Journal of Financial Economics in 1976, laid the foundation for modern corporate governance scholarship. Grounded in the Anglo-American model of dispersed ownership and professional management, the paper framed the firm as a nexus of contracts, highlighting how agency costs arise when the interests of owners and managers diverge. As of August 2025, the article has been cited over 145,000 times, making it one of the most influential contributions in management and economics literature.

This article's impact extends well beyond academic debates: the ideas have shaped theories of ownership and control, informed policy debates on investor protection, and guided practice in executive pay and financing structures. Yet, fifty years on, new institutional realities—such as the rise of sovereign wealth funds, mixed ownership, shareholder activism, and hybrid state–private arrangements in emerging economies—raise fundamental questions about the scope and limits of the original agency model outlined in Jensen and Meckling (1976). This Special Issue takes the 50th anniversary as an opportunity not only to revisit Jensen and Meckling's insights but also to extend them, with a particular focus on China's ownership structures and their implications for agency theory and beyond.

Ownership is defined as (i) cash-flow rights—the financial claims of owners over the income generated by an asset or business, including dividends, profits, and residual value upon liquidation; (ii) control rights—the authority to direct the management and strategy of a company through mechanisms such as voting, board membership, or committee representation; and (iii) political rights—the capacity of owners to shape the political and regulatory environment in which a business operates, whether through party–state influence, golden-share vetoes, or the exercise of governmental authority to regulate private property for public purposes. All submissions must be related to at least one of these ownership components.

The Jensen–Meckling framework raises an important question: Does it adequately capture the ownership realities of China? The assumptions underpinning their model—dispersed ownership, separation of ownership and control, clearly defined property rights, and the primacy of market-based contracting—do not extend neatly to China. In Chinese firms, concentrated ownership is the norm rather than the exception. The primary agency problem in Chinese firms is not the Type I agency problem between managers and shareholders, but the Type II agency problem between controlling and minority shareholders. In addition, property rights in Chinese firms are not always clearly defined, and the extent to which they are depends on the type of firm, the regulatory environment, and the broader institutional framework. Further, ownership arrangements are shaped not only by market logic but also by state interventions and political mandates. These institutional features suggest that the classical agency theory model may not accurately capture the ownership structure of Chinese firms and hence cannot be applied uncritically to China.

Reexamining the core concepts of ownership structure in light of these new contexts and contemporary phenomena that were not relevant or salient when the agency model was developed in Jensen and Meckling (1976) will enable scholars to refine the boundary conditions of the agency theory, generate fresh theoretical insights, and extend theory beyond the agency model and its Western origins.

A China-centric reappraisal of Jensen and Meckling (1976) is theoretically crucial as it provides opportunities to revise, repurpose, and rediscover agency theory. The theory of the firm developed by Jensen and Meckling (1976) was built on the Anglo-Saxon model of corporations, where the separation of ownership and control is the norm in publicly listed firms. However, Chinese firms, including listed Chinese firms, are characterized by a concentrated rather than a dispersed ownership structure. More than 99% of Chinese listed firms have at least one shareholder with more than 10% ownership, and over 80% of these firms have at least one shareholder owning more than 20% of the firm. Therefore, the main agency problem in China is a principal–principal conflict between controlling and minority shareholders.

Concentrated ownership in China often takes distinctive forms: state ownership introduces political objectives, policy mandates, and multiple layers of control that go beyond the economic incentive alignment assumed in the classical model, while family ownership intertwines firm decisions with socioemotional wealth considerations and intergenerational succession logics. Therefore, a special issue focusing on the theory of ownership structure in China is essential, as the underlying assumption of Jensen and Meckling (1976) on corporate ownership structure does not hold in the Chinese context, where concentrated ownership structures—whether state-controlled, founder-controlled, family-controlled, or a hybrid form—are prevalent.

Ownership structures in China are not only concentrated but also dynamically evolving, shaped by shifting relations between the state and business. In Jensen and Meckling (1976), the formation of a firm's ownership structure is an optimal choice that balances the benefits and costs, including agency costs of debt and equity financing. In China, firms' ownership structures are often driven by the government's decisions. It reflects the power play between the new business elite, the scale of the economic assets they control, and the party and government agencies. For example, the Chinese government initiated the split-share structure reform in 2005 to dismantle the dual share structure of state-owned shares and transfer non-tradable state shares in state-owned enterprises (SOEs) to tradable shares that public investors could own. As a result of this privatization process, the aggregated market capitalization owned by the state in SOEs listed in China's stock exchanges and the importance of the state sector gradually declined from the early 2000s to the late 2010s, whereas the private sector and business owners gained more influence and power in the national economy.

However, this 'private advances, state retreats' movement reversed in the early 2020s when the government's economic model shifted to a more centralized strategy, emphasizing robust state control and aligning economic activities with national objectives. The state not only directly controls state-owned firms and state-owned banks through state ownership but also holds shares in privately owned businesses by requiring private businesses to sell a small proportion of their shares to the state, known as 'golden shares'. Moreover, prominent private businesses, of which the state owns shares, may hold equity in smaller private firms in a pyramid structure. The state was an equity investor in 65% of the largest 1,000 privately controlled businesses, had investments in more than 100,000 privately owned businesses, and had indirect influence on more than 3.5 million private businesses in China. The growing influence of the state, driven by the 'state advances, private retreats' movement, may impact firm governance, strategy, operations, performance, and other corporate-level outcomes.

Developing a China-centric theory of ownership that extends Jensen and Meckling's (1976) model of ownership structure by clearly outlining its boundary conditions will deepen our understanding of how China's unique institutional contexts may advance our understanding of agency, property rights, and the theory of the firm.

The ownership patterns of Chinese firms remain complex. In particular, because Chinese law lacks a clear distinction between state-owned and private firms, the lines between state and private control are often blurred, resulting in a broad class of 'non-public enterprise'. As a result, the distinctions between terms such as 'state control', 'non-public', 'private', and 'non-state' are not fully understood and are often defined inconsistently by different authors. Moreover, China has recently promoted mixed ownership that integrates state, collective, and non-public capital. The increasing scale of China's sovereign wealth fund held by the Chinese Investment Corporation further complicates the ownership landscape of Chinese firms.

Uncritically importing Western ownership classifications (e.g., 'state vs. private') into the Chinese context and drawing inferences from prior empirical studies on ownership in Western nations to develop research questions about the ownership structure of Chinese firms may lead to incorrect conclusions. Hence, challenging taken-for-granted assumptions about the agency theory and developing a novel interpretation of this classic work will advance our understanding of agency theory and its applicability in the Chinese context.

This special issue aims to revisit and extend core questions about the theory of the firm and ownership structures in the Chinese context. Submissions are invited that address the implications of agency theory in new contexts and phenomena in China, raise new questions and problems, or apply new methodologies and theoretical frameworks. Submissions must center on an ownership mechanism in China. Papers that treat ownership as a background covariate will not be prioritized. Manuscripts grounded in economics, management, sociology, or psychology are welcome, and interdisciplinary perspectives are encouraged.

Potential topics

• How do hybrid ownership arrangements (e.g., mixed state–private ownership, pyramidal control structures) affect the emergence and management of agency conflicts in Chinese firms?
• How do regulatory reforms, such as the implementation of "golden shares," reconfigure ownership concentration and control rights in listed Chinese firms?
• How do the presence of 'golden shares' or cross-ownership arrangements dampen or enhance strategic autonomy in Chinese private enterprises?
• How do political cycles or changes in national development strategy (e.g., 'state advances, private retreats') influence firm-level ownership restructuring and shape performance and other outcomes?
• To what extent does common ownership exist in Chinese capital markets, and how does it affect competition, monitoring, and firm performance?
• How do sovereign wealth funds influence ownership structures and governance practices in firms where they hold significant stakes?
• What forms of shareholder activism have emerged in China, and how do they shape managerial behavior, firm policies, and the protection of minority investors?
• How and why do firms in China actively reshape their shareholding over time?
• To what extent is ownership structure in Chinese firms an outcome of strategic bargaining among state actors, business elites, and capital markets?
• What are the motives of different types of owners in China? Under what conditions do controlling shareholders in Chinese firms internalize agency costs, and how does this influence their governance behaviors?
• What informal monitoring practices (e.g., political ties, relational contracts, network-based reputation mechanisms) substitute or complement formal governance mechanisms in different types of Chinese ownership structures?
• How do different types of owners (e.g., state, family, institution, etc.) interact within the firm, and what costs and benefits do each type of owner bring to the organization?
• How do shareholder–stakeholder interfaces operate in China, particularly where shareholder priorities may conflict with broader social and environmental objectives of the state and local government?
• How do ownership structures in China differ from those in other emerging and developed economies, and what does this reveal about the boundary conditions of agency theory?
• How can big data analytics and network analysis uncover patterns of ownership concentration, crossholdings, or relational ties that are not visible in traditional datasets?
• What insights can ethnographic or qualitative methods, such as grounded theory and fuzzy-set qualitative comparative analysis (fsQCA), provide into the informal norms, political connections, and social relationships that underpin ownership arrangements in China?
• How can mixed-method approaches combine archival data, surveys, and fieldwork to capture the multi-level dynamics of ownership in Chinese firms?
• Other methodological innovations in the study of ownership to capture evolving and complex patterns of governance.
• How do the other theoretical frameworks, such as behavioral theory of the firm, upper echelons theory, resource dependence theory, and managerial cognitive perspective, complement agency theory to explain ownership mechanisms in China, and under what circumstances?
• Research that develops an indigenous theory of ownership structure rooted in the Chinese context.

Timeline

• November 1, 2026: Full paper submission deadline

Timeline

• December 1, 2026: Submission deadline

Timeline

• November 30, 2026: Submission deadline