Are U.S.-Listed Chinese Firms a Minefield? A Board Perspective
Chao Xi & Yurong Huang, ‘Are U.S.-Listed Chinese Firms a Minefield? A Board Perspective’ The International Lawyer 54 (2021) 201
47 Pages Posted: 25 May 2021 Last revised: 8 Jun 2021
Date Written: May 8, 2021
Are the US-listed Chinese firms, as a group, truly a corporate governance minefield to be avoided at all cost? Much of the focus in the current debate has been, perhaps deservedly, on the decade-old issue of access to the audit papers located in China, an issue known for its political intricacy and complexity. The current Sino-US confrontation has made the issue, albeit important, all the less likely to be resolved in the near future. It is useful, therefore, to direct our attention also to an alternative and potentially productive venue: the corporate board.
Drawing upon two unique, comprehensive datasets we have created specifically for this research, this research sheds fresh empirical light on some previously little-known characteristics and patterns of the US-listed Chinese listed companies and, in particular, their boards and board committees. We show empirically that board and board committees of Luckin – the US-listed Chinese firm at the centre of a recent corporate scandal – were among the least independent in the group of Nasdaq-listed Chinese firms. We therefore caution against judging the whole group of US-listed Chinese companies on the basis of what appears to be an outlier firm. Our research also empirically demonstrates that the Chinese companies listed on the NYSE and Nasdaq, on average, have less independent boards and boards committees than S&P 500 and Russell 3000 firms do. Care should be taken in interpreting this finding, however. Overall, our research does not offer much support to the views categorically labelling the whole cohort of the US-listed Chinese firms as a minefield insofar as board-level governance is concerned.
Keywords: US-listed; China; Board
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