DownloadIt股权结构、现金流与资本投资

1、Law, Corporate Governance, and Corporate Scandal in ChinaYi ZhangPeking UniversityInternational Conference on Corporate Governance Shanghai March 2005I. IntroductionIt has been over ten years since stock markets established in China. China stocks market has been playing a role .there exist so many l

2、isted firms committed fraud and scandalSince 1992, about 200 listed firms among 1200 have been subject to security enforcement action by China Securities Regulation Commission (CSRC), Shenzhen Stock Exchange (SZSE) and Shanghai Stock Exchange (SSE). The ratio of firms with scandal is far above the l

3、evel of other countries MotivationWhat contributes to firms scandal?Does corporate governance matter in China?Is there a sound corporate governance mechanism could prevent scandal?Does legal and economic development matter?- Is there a difference between firms in regions with various legal effective

4、ness? - economic development?II. Issues and Hypothesis: -Corporate governance-legal-economic-finance1. Corporate Governance1.1. ownershipOne of the most essential feature of the ownership of Chinese listed firms is the dominance of the largest shareholderThere has no effective mechanism to monitor a

5、nd restrict the large shareholdersThe large shareholder can expropriate the minority shareholders for private benefit1. Corporate Governance1.1. ownershipJensen(1976)Stulz (1988)H1A: As the ownership of the largest shareholder increases from zero, a firm is more likely to be associated with scandal

6、Entrenchment of large shareholdersExpropriation by large shareholderLa Porta, Lopez-De-Silanes, Shleifer (1999)La Porta, Lopez-De-Silanes, Shleifer (2002)Claessens, Djankov, Fan, and Lang (2002)Fan and Wong (2002)H1B: As the ownership of the largest shareholder increases over certain level, a firm i

7、s more likely to be associated with scandal 1.2 Firm ControllerThere is fundamental difference between state and non-state shareholdersThere is huge difference among state shareholders in internal monitoring, etc.-central government (bu/wei,中央部委）和 -non-central government (非部委）Li and Zhang（2005）Li an

8、d Zhang（2004）Lin and Zhang（2004）1.2 Firm Controller-central government (bu/wei,中央部委）和 -non-central government (非部委）central government controlledlocal government controlledlocal State Enterprises (SOE) controlledNon-state legal person controlledNatural personothers1.2 Firm ControllerCentral governmen

9、t controlled firms are associated with clearer ownership, ( a little) more transparency, more monitoringmore social responsibility，(maybe) better protection of minority shareholders Non-central SOE and non-state legal person controlled firms are associated with less transparency and lack of monitori

10、ngup to less social responsibilitylack of protection of minority shareholders H2: Firms controlled by central(/local) government are less likely to be associated with scandal 1. Corporate Governance1.3 BoardFama and Jensen (1983) theorize that the board of directors is the highest internal control m

11、echanism responsible for monitoring the actions of top management. -the composition of individuals who serve on the board of directors is an important factor in creating a board that is an effective monitor of management actions Famas (1980) and Fama and Jensens (1983) theory would predict that high

12、er percentages of independent directors increase the boards effectiveness as a monitor of management. Jensen (1993) argues that boards of director are ineffective monitors when the board is too large, when the boards equity ownership is small, and when the CEO is also the Chairman of the Board. comp

13、osition of the board of directors determines its effectivenessDeFond and Jiambalvo (1991)Beasley (1996)Dechow, Sloan and Sweeney (1996), etc.Board composition and disclosureChen and Jaggi（2000）The board sizeH3A: Firm with a larger board size is more likely to be associated with scandal The board-man

14、agement relationshipThe CEO/ChairmanH3B: Firm with a separate CEO and Chairman is less likely to be associated with scandal Independent directorsIndependent directors, compared with inside directors, are less likely to collude with managementH3C: Firms with lower proportion (seats) of independent di

15、rector on the board of directors are more likely to be associated with scandal Director holdingsH3D: Firms with a higher ratio(number) of directors hold firm stock are less likely to be associated with scandal Chairman HoldingH3E: Firms with higher Chairman stock holding are less likely to be associ

16、ated with scandalDirector CompensationH3F: Firm with higher ratio(number) of director paid are less likely to be associated with scandal 1.4 Supervisory Committee (Board of Supervisors-监事会)Supervisory Committee sizeH4A: Firms with a larger Supervisory Committee size is more(less?) likely to be assoc

17、iated with scandal 1.4 Supervisory Committee (Board of Supervisors-监事会)Supervisory Committee member holdingsH4B: Firms with a higher ratio(number) of supervisors hold firm stock is less likely to be associated with scandal Supervisory Committee member CompensationH4C: Firm with higher ratio (number)

18、 of Supervisory Committee member paid is less (or more?) likely to be associated with scandal 4Institution investors机构投资者能够降低公司内部的代理成本，减少公司管理层的不良行为Jarrell and Poulsen (1987)Brickley, Lease, and Smith (1988)机构投资者更倾向于反对减少股东财富的行为机构投资者相比其他类型的投资者而言更需要透明度和信息的披露Healy et al. (1999)Bushee和Noe (2000)机构投资者更偏好购

19、买那些持续披露信息的公司的股票长期持有公司股票的机构投资者，很可能出于自身的利益而合谋进行不法行为机构投资者可以从中得到的益处财务性的收益，如低于市价的转让价格，阻止封闭式基金的赎回以及承销、财务顾问方面的合同（Barclay, Holderness, 和 Pontiff (1993)）非财务性的收益，如影响公司在政治、经济或社会方面的政策就我国的实际情况而言，基金、证券等机构重仓持有上市公司的股票，利用内部信息进行炒作、牟取暴利已不是秘密因此，在我国机构投资者的持股比例同公司违规行为是正相关还是负相关或不相关需要实证检验。H4：Institution holdings are related

20、 to the likelihood for firm to commit scandalFinancial distressFirms confronting with financial distress are more likely to commit financial statement fraudNeed control for financials 3. Economic developmentFirms in more economy developed region are less likely to be associated with scandal 4.Law Wr

21、itten lawLLSV (1998)Allen, Qian, Qian (JFE,forthcoming)Effectiveness of law is more important than the written law in a transition economyBerkowitz et al (2003)Alford (2000)Lu and Yao (2004)Chinas provinces significantly differs in terms of legal development. Whether law effectiveness in the region

22、affects firms decision to commit fraud?Maybe law does not matter since law is not effective over all in China?四、实证研究方法 （i）变量 SCANDAL，公司是否被监管机构认定为违规并公开批评,谴责或处罚控制变量DEBT：公司的资产负债率ROA：公司的资产收益率 LIQUIDITY：公司的流动比率2实证回归模型 Matching scandal firms with non-scandal firmsLogistic regressionExamine firms propensit

23、y to commit scandalSCANDAL=f(0+1GOVERN+2INSTITUTE+3BOARD+4FSIZE+5DEBT+6ROA +7LIQUIDITY+（Other Controls）) （1） 五、样本与数据 （一）数据In order to identify firms that commit scandal, we refer to the China Securities Journal, Shanghai Securities Journal and the Guotaian Dataset for financial scandals. The total n

24、umber of firms subject to enforcement actions by the CEC, SSE, and SZSE between 1993 and 2003 is 178. We eliminate 12 firms whose governance information in and before the fraud period are not available, 2 firms listed on B-Stock Market of China, and 4 firms that cannot be matched by industry code, a

25、nd then the sample size is reduced to 160 虚构利润虚列资产虚假陈述重大遗漏擅自改变资金用途大股东占用资产违规担保五、样本与数据 Each of the scandal firm is matched with a no-scandal firm, creating a choice-based sample of 160 scandal and 160 no-scandal firms. The control firm is obtained by the following four-step process:(i) Stock Exchange

26、(ii)Industry. 3-digit industrial code. If theres no firm matching the three digits, then select that of the same primary two digits (iii) Firm Size. 53 of 160 committed scandal in a period lasting 2 or more accounting years, and we define the fraud period of these firms as the first date of their fi

27、nancial statement fraudWhen firms committed scandal and was denounced/criticized/punished more than once, we only record the first timeSample descriptionlogistic回归分析Governance and financialsAdd marketization indexProxy for economics developmentProxy for legal developmentProxy for financial developme

28、ntCorporate GovernanceOwnership LARGEST回归系数为负,在5%水平上显著,LARGESTSQ的回归系数为正，在10%水平上显著第一大股东持股比例从零开始增大, 公司越不会commit scandal;当第一大股东持股比例达到一定水平,持股比例越高,公司越可能commit scandal;LOCAL和LEGALP的回归系数为正，LOCAL在5%水平上显著，LEGALP在0.1%水平上显著非国有法人和地方政府控制的公司更有可能违规董事会BOARDSIZE, INDEPENDENT均不显著董事会规模和独立董事席位（比例）CHAIRCEO不显著CEO是否兼任董事持股

29、董事人数（比例）和付报酬董事人数（比例）均不显著CHAIRHOLDING为负，在10水平上显著董事长持股比例越高，公司越不会commit scandal监事会监事会规模不显著持股监事人数（比例）不显著付报酬监事比例显著为正(10% 水平)取得报酬的监事比例越高，公司越可能commit scandal机构投资者机构投资者持股比例不显著分拆上市或整体上市分拆上市或整体上市没有显著影响Controls流动比率的回归系数显著为负流动比率越高的公司，financial distress的可能较小,违规可能较小DEBT的回归系数为正，但统计上不显著ROA的回归系数显著为负资产收益率较高的公司违规可能较小R

30、egion developmentNortheast显著为正, 公司发生丑闻的可能性较高midyangtz显著为正, 公司发生丑闻的可能性较高Economic developmentlgdppc，该省人均GDP对数值为负，并在统计上显著经济越发达，公司发生丑闻的可能性越小Legal developmentMeasure of legal effectiveness检察院 (procuratorial system)ProcuratorialCases_per_capita: 立案经济案件ProcuratorialCases_gdpLoss_to_GDP: The ratio of saved

31、loss by procuratorial suits to local GDP Cadre_In_procurate:This measures the corruptness of officials. The number of cadres at county level or above (县处级以上)involved in procuratate divided by the population Legal development法院 (court system)Case_Close_Rate RCMP: The number of commercial cases received by the court per million of population律师协会 (lawyer association)Lawyer_per_capitaLawyer_G