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China's stock market violations of the listed company governance effect?

Author: ZhouJie From: www.yourpaper.net Posted: 2009-06-15 03:53:40 Read:
[Abstract] violations of the Chinese stock market listed company, whether the effective governance of listed companies whether investors penalizing violations of the listed companies. The research results show that the stock market does not punish violations of the listed companies, external governance mechanism is through the stock market. Therefore, in addition to the more scientific and rational institutional arrangements beforehand contract to regulate the behavior of the subject, the objective must be more instructive Code of Conduct - the ethics of the corporate governance system.
[Keywords] violations; governance effect; stock market; ethics

Background

Over the past 20 years, China's economic system and values, a significant change, including the establishment of the market economy system, the perfection of the capital market with the formation of the modern corporate system marks China's economic development continues to mature. At the same time, the principal-agent problem caused by the phase separation of ownership and management of modern corporate system, making the corporate governance reforms designed to address the behavior of managers opportunism "to protect the interests of investors over the past 20 years of China's economic development Another focus. Chinese listed companies from the level of institutional arrangements under the joint efforts of the relevant administrative departments of the listed companies with the SFC, seems to have been the initial formation of a modern corporate governance structure, such as the establishment of the Board, the introduction of independent directors, the formation of the information disclosure system, equity structure optimization. Although these "rigid" system of governance continues to improve, driven by economic interests, China's listed companies or frequent security breaches, financial fraud, bribery and embezzlement of public funds, such as some worrying issues, such as Shandong Juli suspected The inflated profits cheat eligible for allotment the huge loans But'one allegedly misappropriated Nanning Department Store General Manager of alleged bribery, these acts seriously prejudicial to the interests of the shareholders, society and other stakeholders. Of course, this also shows the shortcomings of the only system of rules of corporate governance reform-oriented. Due to asymmetric information and limited knowledge led to the incompleteness of the contract, simply rely on the beforehand fixed contract or the institutional arrangements to constrain stakeholder behavior inevitably incomplete, lag, making some stakeholders interests Debu to safeguard, in turn jeopardize the complete fulfillment of the entire contract. As Hayek think I "in today's complex society, without a contract expressly provided to prevent all accidental Therefore, in addition to a more scientific and reasonable system arrangements prior contract to to regulate the behavior of the subject, the objective must be more guidance in the broader range of Conduct to regulate the behavior of the subject - the ethical system of corporate governance as an essential complement to the legal, institutional belonging corporate governance rigid, structured, semi-structured constraints, ethical flexible, non-structural constraints, firmness and flexibility, with Zhang relaxation, to improve corporate governance fundamentally how the "soft environment" form one of the effective mechanisms of corporate governance, give full play to the role of ethical corporate governance, will become an important direction for future corporate governance reform. violations of the listed companies from another perspective that managers in order to pursue the company itself or managers personal economic interests while ignoring the interests of other stakeholders. precisely reflects the weakening of the company's business process ethics, makes some domestic scholars have started to pay attention to the governance structure of listed companies in China are missing an important dimensions - ethical. despite the growing number of scholars have also noted the ethical, moral role in corporate governance, but how to establish effective ethical governance mechanisms to suppress non-ethical behavior of Chinese listed companies, Chinese companies have through ethics to govern the operation of the "platform", rarely addressed the "soft environment" inseparable from the values ??of the stakeholders to play a role in the platform, the pursuit of the goal as one of the important stakeholder shareholders will directly affect the management by ethical behavior in the course of business.

Second, the theory of literature review

One of the goals of the corporate governance is to ensure that investors get their returns through the establishment of the managers incentive and restraint mechanisms. Although shareholders can "hand vote" directly involved in the internal corporate governance, but in the highly fragmented condition of equity, as the governance body of shareholders can be formed through the capital market external mechanisms of corporate governance, stock price changes of managers formation pressure, in order to protect their own interests. Undeniably, managers play an important role in shaping the company's ethical atmosphere and culture, but in the face of pressure from shareholders, the behavior of managers will need to reflect the wishes of the shareholders. In contrast, shareholders of the response to a number of ethical behavior precisely for managers to shape the ethical atmosphere with the business philosophy to form the corresponding guidelines. Therefore, the stock market will become an important platform for ethical governance mechanisms play a role. Zhang et al proposed mechanism of action of the ethics of corporate governance model, the company's non-ethical behavior can effectively suppressed by external constraints, and the Board of Directors of the stock market's response to changes in the stock market, but the results show that, regardless of external constraints and internal respond mechanism. The most important of the conduction path is the reaction of the stock market for non-ethical behavior, response to shareholders of listed companies in non-ethical behavior become the main force to push the managers and the company itself for ethical decision-making. However, the study only qualitative analysis of the mechanism of governance ethics conduction path, and no empirical research methods to explore whether the stock market can punish violations of the listed companies in China, whether external governance effects net compliance.
Of course, whether the capital markets will punish violations of the listed companies or produce governance effect lies in the attitude of the investors for violations of the listed companies. Lagging effect due to the disclosure of the violations of the listed companies, when the violations listed companies disclosed and not fundamentally affect the company's current or future operating conditions and financial results. Corporate performance is an important factor to attract investors, but the company performance not only refers to the company's financial performance, but also include social performance. Foreign practice shows that the rapid emergence of socially responsible investment (SRI) wave makes institutional investors began to focus on other aspects of the object of economic investment, financial condition, its outside. SRI in the United States and the United Kingdom's total investment occupy considerable "cases of Graves' and Waddock through empirical studies found that the company's social performance and investment in the company's agency the number was significant with a positive correlation between Langtry also pointed out that, unless you have the ability and willingness to stop the bad behavior of what Secretary, or to buy the company's stock is morally wrong; company and its manager layer in addition to the need to have legal obligations, but also need to take a moral obligation. investors want to invest in target consistent with the values ??of the company and their philosophy, will consider investment object ethical behavior, and funds to invest in social responsibility and social performance company Cox and other study sample of 500 UK companies by empirical research found: long-term institutional investment and corporate social performance was positively correlated; mainly by eliminating long-term institutional investors during the investment law, refused to invest to the worst corporate social performance. addition, as people continuously strengthen ethics, of minority shareholders will prefer to listed companies with strong ethical Cone Corporate Citizenship, a research report showed that in 2004 when it became known that a non-ethical social behavior, 80% indicated that they would sell the The stock of the company, 80% of people refused to buy the company's stock. despite some violations and did not touch on the economic interests of the company, but it does touch on the ethical bottom line - legal, this reflects the lack of social responsibility, and ultimately reduce the social performance of the company, leading to the holdings of the largest shareholder of the stock, this voting mechanism to bring economic results inevitably lead to a decline in stock price, to other signal transmission with their feet, but also played suppressed the role of the company's non-ethical behavior found by the above analysis, ethics investors through the capital market can indeed produce the company's illegal acts governance effect to pass the company's management philosophy of ethical management. use of empirical and some foreign scholars research methods directly examine the relationship between the company's non-ethical behavior and stock price, the results support the existence of ethical investment behavior, and also prove that the punitive effect of stock market irregularities Long and Rao, the company's bribery, illegal payment of employee discrimination, environmental pollution and other acts of insider trading on stock prices, the results show that these non-ethical behavior have a negative impact on shareholder value, support the conclusion of ethical behavior consistent with the interests of shareholders. Gunthorp-e United States several typical violations of public companies as research subjects, examine the condition of the financial markets on the punishment of the company's non-ethical behavior, found that when Company Announcements non-ethical behavior, the stock market, a significant negative excess returns conclusions show that the external capital The market is indeed punished the company's non-ethical behavior.
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