Reputational Sanctions in China's Securities Market

55 Pages Posted: 11 Jul 2007

See all articles by Benjamin L. Liebman

Benjamin L. Liebman

Columbia University - Law School

Curtis J. Milhaupt

Stanford Law School; European Corporate Governance Institute

Date Written: June 8, 2007


Literature suggests two distinct paths to stock market development: an approach based on legal protections for investors, and an approach based on self-regulation of listed companies by stock exchanges. This paper traces China's attempts to pursue both approaches, while focusing on the role of the stock exchanges as regulators. Specifically, the paper examines a fascinating but unstudied aspect of Chinese securities regulation, namely, public criticism of listed companies by the Shanghai and Shenzhen exchanges. Based on both event study methodology and extensive interviews of market actors, we find that the criticisms have significant effects on listed companies and their executives. We evaluate the role of public criticisms in China's evolving scheme of securities regulation, contributing to several strands of research on the role of the media in corporate governance, the use of shaming sanctions in corporate governance, and the importance of informal mechanisms in supporting China's economic growth.

Keywords: China, stock market, securities regulation

Suggested Citation

Liebman, Benjamin L. and Milhaupt, Curtis J., Reputational Sanctions in China's Securities Market (June 8, 2007). Columbia Law and Economics Working Paper No. 318, Available at SSRN: or

Benjamin L. Liebman (Contact Author)

Columbia University - Law School ( email )

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United States

Curtis J. Milhaupt

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

European Corporate Governance Institute ( email )

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