China's Listed Companies. Conflicts, Governance and Regulation

As in many transition economies, China’s legal infrastructure and enforcement is poor. A weak self-regulatory system and inefficient law enforcement makes it easy for controlling shareholders to manipulate control rights and maximize their own benefit, rather than that of investors.

This new book is the first to address the serious ‘tunneling’ or expropriation of minority shareholders by large shareholders in China’s listed companies.

It analyses the roles of three main interest groups:

• controlling shareholders, who in a weak legal system can abuse control rights by tunneling assets, profits and business opportunities for their own benefits;
• institutional investors, who may be institutional activists or market manipulators;
• minority shareholders, who often suffer from expropriation and tunneling and require access to legal remedies.

Using a law and economics approach, the work sets out the current problems, and offers you solutions. It analyses the types of pervasive misconduct of large shareholders in China’s listed companies, and suggests concrete reform proposals toward effective protection of minority shareholders in the areas of regulation, enforcement, and the judiciary.

These reforms include recognizing the fiduciary duty of controlling shareholders, improving voting rights for minority shareholders, enhancing the disclosure system, and restricting insider trading and market manipulation.