Mass exodus of executives at China's listed firms this year

Want China Times, Staff Reporter 2014-05-18

Shanghai Jahwa Corporation general manager Wang Zhuo, one of thousands
of executives at China's listed companies to have stood down already this year.
(File photo/CFP)

A total of 2,743 executives employed at listed firms in China have stood down so far this year as of May 14 this year, with an analysis saying that their resignations were mainly the result of operational pressures, being placed under investigation by authorities or due to internal conflicts, in addition to more innocuous reasons.

On Thursday alone, six companies issued statements announcing the resignation of some of their executives.

In recent years it has not been uncommon to see executives leave their jobs due to business expansion, corporate restructuring and mergers among listed firms, but the number of people who have resigned so far this year is unusually large, said an analyst.

"During the first quarter of this year, the performance of public firms was bad and many companies reported losses. Although seasonal factors were involved, they will still face mounting pressure in the future," said a market analyst from Huatai United Securities.

The number of executives who chose to leave their companies in April grew substantially at 1,101, but the pace had slowed down in May.

The Huatai analyst said that as April was the first month following the first quarter, some might choose to go as they failed to achieve a specific performance target.

In addition, managerial personnel at some companies may also have been forced to resign because of internal conflicts or restructuring in the company.

The growing crackdown launched by Chinese regulators in the market is another reason for the wave of resignations. Some executives had no choice but to resign because they were being investigated for suspected wrongdoing.

Another market analyst said that as executives are the key staff members at listed companies, their resignations would inevitably affect the companies' business. However, the analyst also pointed out that internal conflict can be a more serious problem as it hurts the companies' management and can impact sales.

The executives being investigated for violations also have a major influence on their companies' performance because such cases usually involve mergers and acquisition of assets, which could drag down stock prices significantly, the analyst added.

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