We, the editors of this special issue, both teach modern corporate finance theory in business schools
in China. When we describe or illustrate a financial management theory, concept, or practice, all of
which are based primarily on Western thought and practices, our Chinese students often respond,
“this is not how it is done in China.” As we have gotten to learn China’s financial management policies
and practices, and the regulations that directly affect these policies and practices, we have to come to
realize that our students are sometimes right. However, they are also sometimes wrong. In what ways
is financial management in China similar to what is practiced in other countries, and in what ways is
it different? Shedding some light on this question is the purpose of this special issue.
In our introduction to the special issue, we first briefly review the literature on China’s financial
management policies and practices.2 In this way, we try to narrow the gap in the profession’s understanding
of China’s financial management practices. We document both similarities and differences
between China and the rest of the developing and developed world. Second, and more importantly,
we describe how the papers in this special issue improve our understanding of financial management
practices in China. Finally, we make many suggestions for future research.