Fraud,Enforcement Action,and the Role of Corporate Governance: Evidence from China |
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Authors: | Jia Chunxin Ding Shujun Li Yuanshun Wu Zhenyu |
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Institution: | (1) School of Business, University of Ballarat, P.O. Box 663, Ballarat, Victoria, 3353, Australia;(2) Guangzhou Academy of Social Science, Guangzhou, China;(3) The National Economic Research Centre, GuangDong University of Business Studies, Guangzhou, China;(4) School of Business, Centre for Regional Innovation and Competitiveness (CRIC), University of Ballarat, P.O. Box 663, Ballarat, Victoria, 3353, Australia |
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Abstract: | We examine enforcement action in China’s emerging markets by focusing on (1) the agents that impose this action and (2) the
role played by supervisory boards. Using newly available databases, we find that supervisory boards play an active role when
Chinese listed companies face enforcement action. Listed firms with larger supervisory boards are more likely to have more
severe sanctions imposed upon them by the China Security Regulatory Commission, and listed companies that face more severe
enforcement actions have more supervisory board meetings. Our findings are of interest, as supervisory boards in China are
generally perceived to be dysfunctional. This study contributes to the existing literature in three ways. First, we shed light
on the effects of supervisory boards whose role in a fraud setting has not yet been examined. Second, the study has important
policy implications for governance reform. Finally, our analyses provide the most up-to-date picture of fraud and governance
issues in China’s ever-growing markets. |
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