Compliance with and through the Rules of Corporate Governance in China

Abstract

This thesis takes a forward-looking approach to review China’s corporate governance comprehensively and critically from the perspective of compliance with and through corporate governance rules in China. After comparing the corporate governance compliance regimes in China and the UK, this thesis suggests that the way to improve corporate governance in China is to introduce some non-governance rules that requiring governance changes into corporate governance rules. And the non-governance rules can be supplemented by other corporate governance rules to make compliance more likely. At the heart of this thesis are five main contributions. First, it argues that traditional penalties are no longer an effective deterrent to prevent and reduce corporate crimes, and compliance as an ex ante regulatory tool shows the trend of the law shifting from ex post punitive deterrence to ex ante preventive initiatives. Second, it argues that the use of voluntary self-regulation in corporate governance has become an effective measure to improve corporate governance, as it allows companies to adapt their corporate governance structure to their own circumstances and thus achieve high compliance. Third, it finds that whilst China’s current corporate governance compliance system has all the rules to solve agency problems between the various constituencies, does not effectively address these issues and compliance in practice is ineffective, and it makes several arguments to account for this deficiency. Fourth, it examines the UK corporate governance rules, arguing that achieving a truly effective compliance regime requires strengthening corporate governance autonomy and weakening government regulation. Fifth, it argues that strengthening autonomy and weakening coercion should be the direction for the reform of corporate governance compliance rules in China. It is believed that this thesis will have positive implications for both corporate governance and compliance in China.