Solving the Puzzle of Corporate Governance of State-Owned Enterprises: The Path of the Temasek Model in Singapore and Lessons for China

The purpose of this Article is to examine the corporate governance of state-owned enterprises (SOEs) in the Asian context by empirically surveying the influence of Temasek Holdings, Singapore’s sovereign wealth fund, on its portfolio of government-linked companies in Singapore. Overall, the Temasek model seems to be a promising one. This Article shows that the top listed government-linked companies in which Temasek has a stake have greater board independence than the other top listed companies in Singapore. This illustrates that a high quality of corporate governance could be aligned with public interests associated with SOEs. While this research offers hope for SOE reformers in China, the Article also argues that the need for strong public governance, the role of foreign activities and market forces, and the importance of a government’s desire to serve as a market leader are all underlying factors that make Temasek what it is today. Unfortunately, in the absence of those institutional factors, transplant of the Temasek model to other countries is unlikely to be entirely successful. * Assistant Professor of Law, Singapore Management University. The author thanks for the kind sponsorship of the Singapore Management University to fund this research (Research Grant No. 14C234-SMU-006). 36_2_2_CHEN FINAL.docx (DO NOT DELETE) 3/30/16 3:21 PM Northwestern Journal of International Law & Business 36:303 (2016) 304 TABLE OF CONTENTS