Public and Private Enforcement of Corporate and Securities Laws: An Empirical Comparison of Hong Kong and Singapore

46 Pages Posted: 26 Mar 2018 Last revised: 29 May 2018

See all articles by Wai Yee Wan

Wai Yee Wan

Singapore Management University - School of Law

Christopher C. Chen

Singapore Management University School of Law

Say Hak Goo

The University of Hong Kong - Faculty of Law

Date Written: November 8, 2017

Abstract

Current scholarship emphasises the correlation between enforcement of corporate and securities laws and strong capital markets. Yet, the issue of how private and public enforcement may achieve the objectives of compensation and optimal deterrence remains controversial. While enforcement strategies have been studied extensively in the US and the UK, comparatively less attention is placed on Asia where concentrated shareholdings are the norm. This study fills the gap by focusing on Hong Kong and Singapore, two leading international financial centres in Asia. Post-Asian financial crisis of 1997, Hong Kong and Singapore have changed their laws to strengthen the private enforcement framework. Public enforcement activities have also been significant. The question is whether these reforms and enforcement activities succeed in reaching the afore-mentioned objectives. Based on our study of breaches of directorial duties and corporate disclosure violations involving listed companies from 2000 to 2015, we find that (1) public enforcement dominates over private enforcement; and (2) there exist important, but limited, substitutes to private enforcement: securities regulators use public enforcement to obtain compensation for investors and shareholders file requisitions to remove the errant directors. We argue that: (a) there is a significant gap in enforcement strategies for directorial wrongdoing in Singapore; (b) for public enforcement of corporate disclosure violations, the beneficiaries of the compensation should be the investors (rather than the company) and the defendants should only be the errant directors (and not the company). Our study is relevant to those jurisdictions considering the powers of regulators and improving their enforcement framework.

Keywords: Corporate Law, Securities Regulation, Enforcement, Singapore, Hong Kong

JEL Classification: K22

Suggested Citation

Wan, Wai Yee and Chen, Christopher C. and Goo, Say Hak, Public and Private Enforcement of Corporate and Securities Laws: An Empirical Comparison of Hong Kong and Singapore (November 8, 2017). University of Hong Kong Faculty of Law Research Paper No. 2018/025. Available at SSRN: https://ssrn.com/abstract=3149367 or http://dx.doi.org/10.2139/ssrn.3149367

Wai Yee Wan (Contact Author)

Singapore Management University - School of Law ( email )

55 Armenian Street
Singapore, 179943
Singapore

Christopher C. Chen

Singapore Management University School of Law ( email )

55 Armenian Street
Singapore, 179943
Singapore

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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