Do Corporate Governance Practices in One Jurisdiction Affect Another One? Lessons from the Panama Papers

Chinese Journal of Global Governance 5(2), 2019

19 Pages Posted: 19 Jan 2018 Last revised: 18 Feb 2020

See all articles by Bryane Michael

Bryane Michael

University of Hong Kong Faculty of Law

Say Hak Goo

The University of Hong Kong - Faculty of Law

Date Written: November 1, 2017

Abstract

To what extent do corporate governance practices in one jurisdiction affect another? In this paper, we look at the way that Hong Kong’s and the Mainland’s corporate governance practices have co-evolved, along with offshore incorporations from both places. Drawing on empirical illustrations of the data using analytical techniques like differential equations and Fourier Spectral Analysis, we find a strong relationship across time between changes in corporate governance practices in both jurisdictions as well as offshore incorporations. Our data also support the idea of a theory-free equilibrium level of corporate governance (determined by market participants’ own behaviour rather than by a theory-laden econometric model). We show that lethargy likely explains the persistence of corporate governance practices in both places, with innovations in one place correlating with innovations in the other. Such work clearly implies that corporate governance improvements in one place can help encourage such improvements in other markets which have not adopted laws aimed at improving corporate governance.

Keywords: Chinese corporate governance, Panama Papers, corporate governance spill-overs, differential equations, Fourier spectral analysis

JEL Classification: G34, N25, M14

Suggested Citation

Michael, Bryane and Goo, Say Hak, Do Corporate Governance Practices in One Jurisdiction Affect Another One? Lessons from the Panama Papers (November 1, 2017). Chinese Journal of Global Governance 5(2), 2019, Available at SSRN: https://ssrn.com/abstract=3101251 or http://dx.doi.org/10.2139/ssrn.3101251

Bryane Michael (Contact Author)

University of Hong Kong Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

Say Hak Goo

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

HOME PAGE: http://hub.hku.hk/rp/rp01248

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