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Rethinking the Relevance or Irrelevance of Directors’ Duties in China: The Intersection between Culture and Laws

Published online by Cambridge University Press:  28 January 2014

Raymond Siu Yeung CHAN ,
Daniel HO  and
Angus YOUNG
Raymond Siu Yeung CHAN
Affiliation:
School of Business, Hong Kong Baptist University, Kowloon Tong, Kowloon, Hong Kong, China
Daniel HO
Affiliation:
School of Business, Hong Kong Baptist University, Kowloon Tong, Kowloon, Hong Kong, China
Angus YOUNG
Affiliation:
School of Business, Hang Seng Management College, Hang Shin Link, Siu Lek Yuen, Shatin, New Territories, Hong Kong, China; School of International Law, Southwest University of Political Science & Law, Chongqing, China
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Abstract

This paper investigates how culture affects people’s attitudes towards directors’ duties in the People’s Republic of China by surveying a sample of Chinese business executives. If cultural practices lead people to behave differently from what the law prescribes, it is a serious regulatory oversight. Our results suggest that Chinese cultural values do matter when it comes to the perception of breaches of directors’ duties. Specifically, we find that respondents who identify with moral-discipline related traditional Chinese values are more lenient to the chairman breaching his director's duties, whereas respondents who subscribe to modern Chinese values are less receptive to the director failing to report the chairman’s contravention of his director’s duties. These results suggest that it is imperative for China’s law-makers to rethink their approach to regulating directors’ duties instead of the wholesale transplantation of laws from Western countries.

Keywords

directors’ dutiescultureChinacorporate lawcorporate governancelegal transplant
Type
Legal Profession and Social Change in East Asian Countries
Information
Asian Journal of Law and Society , Volume 1 , Issue 1 , May 2014 , pp. 183 - 203
Copyright
Copyright © Cambridge University Press and KoGuan Law School, Shanghai Jiao Tong University 

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Footnotes

*

We would like to thank the Hong Kong General Research Fund for the grant to undertake this research (Project Reference GRF 242309). We would also like to acknowledge research support from Cynthia Ho.

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