Hard Corporate Governance Law in a Soft Law Jurisdiction

23 Pages Posted: 19 Jan 2018 Last revised: 6 Feb 2018

Bryane Michael

University of Oxford

Say Hak Goo

The University of Hong Kong - Faculty of Law

Date Written: November 1, 2016

Abstract

China’s fuzzy corporate governance rules (whether hard or soft) do not help company managers, government officials and others coordinate and cooperate – the raison d’etre for corporate governance rules. In a corporate system dominated by personal relationships and rules, clarity and specificity – even in principles-based corporate governance – serve Chinese corporations far better than passing rules into law or visa versa. We show how existing rules (whether soft, lard, mandatory, voluntary, etc.) harm corporate interests. We illustrate how adding clarity makes the hard/soft law distinction moot. “Coordinatable” rules which help new Chinese participants in corporate governance understand government expectations, follow these understandings, and seek recourse through existing mechanisms, will serve Chinese companies better than best practice or rules of thumb like having a certain proportion of independent directors, internal auditors, etc.

Keywords: Chinese corporate governance, Code of Corporate Governance, coordinatability, hard law, soft law

JEL Classification: G34, N25, M14

Suggested Citation

Michael, Bryane and Goo, Say Hak, Hard Corporate Governance Law in a Soft Law Jurisdiction (November 1, 2016). University of Hong Kong Faculty of Law Research Paper No. 2018/007. Available at SSRN: https://ssrn.com/abstract=3101276 or http://dx.doi.org/10.2139/ssrn.3101276

Bryane Michael (Contact Author)

University of Oxford ( email )

South Parks Road
Oxford, Oxfordshire OX1 3QY
United Kingdom

HOME PAGE: http://users.ox.ac.uk/~scat1663/

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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