Cross-listing corporate governance and financial center cooperation between Hong Kong and Mainland China

This chapter examines a unique dataset, which, to the best of my knowledge, has not hitherto been used. It concerns the relationship between corporate governance and firm value in the context of Chinese firms cross-listed on major international exchanges, which include the NASDAQ, the New York Stock Exchange (NYSE), the Hong Kong Main Board, the Hong Kong Growth Enterprise Market (GEM), the Singapore Stock Exchange, and the London Alternative Investment Market (AIM). The study is grounded in the bonding theory, which asserts that stringent corporate governance requirements imposed by overseas regulations enhance firm value. Contrary to this theory, firms listed on stock exchanges in mainland China alone command significantly better value than those that are cross-listed on overseas stock exchanges. This results in the conclusion that the general bonding theory cannot adequately explain how cross-listing affects firm valuation in the Chinese context, and thus a refined theory is required.

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Part IV Financial Market Conduct and Misconduct, 10 Corporate Governance

10.1093/law/9780198706472.003.0010 ◽

2016 ◽

Author(s):

Arner Douglas W ◽

Hsu Berry FC ◽

Goo Say H ◽

Johnstone Syren ◽

Lejot Paul ◽

...

Keyword(s):

Corporate Governance ◽

Hong Kong ◽

Financial Market ◽

Common Law ◽

Mainland China ◽

The United States ◽

Board Structure ◽

Market Conduct ◽

The United Kingdom ◽

Personal Interests

This chapter addresses corporate governance in Hong Kong. The chapter reviews the ways in which a company’s management is regulated in Hong Kong at common law and equity, by statutory legislation, by the company’s constitutional document (the articles), and by regulatory rules. Such a framework addresses issues such as board structure and operation, the personal interests of directors, dealings between the company and directors, limiting the power of directors, disclosure of information, and the question of when shareholders should be involved in decisions of the board. The chapter shows that due to the domination of companies in Hong Kong by either families or state-owned companies from mainland China, Hong Kong companies have the typical agency problem we see in the United States and the United Kingdom, namely weak performance by the managers, and also suffer from the misappropriation of corporate assets through connected or related party transactions.

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Protection of minority shareholders in Hong Kong and China: do culture and institutional design make any difference?

Northern Ireland Legal Quarterly ◽

10.53386/nilq.v61i1.441 ◽

2020 ◽

Vol 61 (1) ◽

pp. 53-78

Author(s):

Wei-Qi Cheng

Keyword(s):

Corporate Governance ◽

Hong Kong ◽

Institutional Design ◽

Mainland China ◽

Cultural Influences ◽

Asian Countries ◽

Minority Shareholders ◽

Governance System ◽

Corporate Governance System ◽

The Difference

The corporate governance system in Hong Kong and mainland China was transplanted from Western countries. However, the latest ranking in corporate governance in Asia shows that Hong Kong moved to the top of the 2007 ranking above 11 other Asian countries while China was not even included.2 How can such a huge difference be explained? This article compares and discusses the reasons for the difference in corporate governance in Hong Kong and China. In particular, it focuses on discussing local cultural influences and institutional design on the implementation of the system of protection of minority shareholders in Hong Kong and China.

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