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Gatekeepers: Bonding Benefits of Listing Chinese Companies in Hong Kong?

Published online by Cambridge University Press:  04 July 2013

Fanpeng (Frank) Meng
Fanpeng (Frank) Meng*
Affiliation:
Postdoc Fellow, Centre for Financial Regulation and Economic Development, the Chinese University of Hong Kong. I wish to thank David C. Donald, Katharina Pistor, Huang Tao, Zhang Yaling, Pan Xuanming, Fu Xin and Susanna Leung for their helpful comments on earlier drafts. The usual caveats apply..
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Abstract

The bonding hypothesis posits that a firm may improve its governance practices by listing in a foreign developed stock market, thereby subjecting itself to better legal and regulatory rules of the foreign market as well as to a superior level of scrutiny by gatekeepers in the market, which are unavailable in the home market. Previous studies have shown that the bonding effect has occurred on Chinese companies listed in Hong Kong. This article specifically questions whether the effect is accrued in the domain of gatekeeper scrutiny. First, it examines the role of four alleged gatekeepers in the stock markets of China and Hong Kong, i.e., sponsor, corporate attorney, credit rating agency, and auditor. Then, it proceeds to consider whether and to what extent Chinese companies are subject to a superior level of scrutiny by these gatekeepers on account of their being listed in Hong Kong.

Keywords

corporate governancebonding effectgatekeeperChinese companies listed in Hong Kong
Type
Articles
Information
European Business Organization Law Review (EBOR) , Volume 14 , Issue 2 , June 2013 , pp. 265 - 303
Copyright
Copyright © T.M.C. Asser Press and the Authors 2013 

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