How to Prevent China’s Listed Companies from Making Misstatements

Xiaorong Gu

Chapter 3 in Changing Corporate Governance Practices in China and Japan, 2008, pp 29-51 from Palgrave Macmillan

Abstract: Abstract If we take a look at the legal and monitoring systems and cases regarding prevention of listed companies from making misstatements in economies such as those of the U.S., the U.K., Germany, Japan, mainland China, Hong Kong and Taiwan, what we can find in common are the following elements which are closely associated with the making of misstatements: 1. Related parties (a) listed companies and their staff (directors of the board, supervisors, financial and accounting staff); (b) the stock exchange, the securities brokers’ association; (c) the stock exchange regulatory authorities (the Stock Exchange Regulatory Committee or the Bureau of Financial Administration); (d) judicial organs (law courts, prosecutorial authorities) and investigation authorities for securities crime (the public security department or the securities investigation bureau) and their staff; (e) intermediary institutions (accounting firms, investment banks, securities consulting and analysis firms, and law firms) and their staff; (f) investors (including institutional and individual investors). 2. The legal system and regulatory system: relevant corporate/company laws (including accounting rules) that dictate the substantial framework of a company’s operations; and procedural law, domestic law, international cooperation agreements, and the laws and regulations of every country, provide rules for all the above-mentioned parties. Despite the presence of such laws, rules and regulations, companies still manage to maneuver round them, taking advantage of some of the (sometimes illegal) loopholes and “playing the game” for immediate gain in the hope that they will never be caught. 3. Technical equipment, which includes electronic exchange systems, transaction surveillance appliances, and so on.

Keywords: Corporate Governance; Stock Exchange; Stock Option; Information Disclosure; Supervisory Board (search for similar items in EconPapers)
Date: 2008
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DOI: 10.1057/9780230595156_3

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