Is the CSRC Protecting a 'Level Playing Field' in China's Capital Markets: Public Enforcement, Fragmented Authoritarianism and Corporatism

Abstract

This paper uses both empirical studies and case studies to answer an important question: Is the China Securities Regulatory Commission (CSRC) protecting a “level playing field” in China’s capital markets? The results of these studies demonstrate that the CSRC enforces regulations without considerable bias against either private listed companies or local government-controlled listed companies in misrepresentation and insider trading cases. However, the CSRC grants regulatory subsidies to central government-owned (CGO) listed companies. The CSRC's preferential policy toward CGO listed companies reveals the insufficiency of the "fragmented authoritarianism thesis". By contrast, investigating the relationship between the CSRC and the CGO listed companies under the "corporatism thesis" provides a more comprehensive explanation of the unique cooperation-based regulation.

Keywords: Securities Law, Public Enforcement, State-owned Enterprise, Fragmented Authoritarianism, Corporatism

JEL Classification: K22