Governance structure, organizational form, and business performance: A study of the Shanxi piaohao (banks), 1820s–1930s
基于一手史料，首次实证分析山西票号的组织与绩效，揭示其通过同乡担保、中央集权M型结构和多边惩罚机制解决承诺问题，但后期因治理僵化而衰落。
This paper studies Shanxi piaohao, China’s first and largest private remittance banking group, established by a group of merchants from Shanxi province. Drawing on extensive primary sources, our study offers the first empirical analysis of the piaohao’s business organisation and performance. We show that piaohao thrived but were also constrained by their own private rules. In their earlier development, they successfully overcame the commitment problem by implementing a townsmen-guarantor-based recruitment system, a centralised M-form structure, and a multilateral punishment mechanism. To align the interests of shareholders and employees, they created employment shareholders and offered a competitive compensation scheme. However, piaohao’s governance structure became obsolete as shareholders increasingly failed to monitor head managers in the later period. A drastic increase in business volume and a changing business climate also exposed the defects of a centralised structure. As modern Chinese banks rose to prominence, the piaohao were gradually outcompeted and declined.