Corporate Governance and China’s H-Share Market
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Corporate Governance and China’s H-Share Market

Alice de Jonge

Using detailed case studies of the first nine mainland Chinese companies to be listed on the Hong Kong stock exchange, this book examines the evolution of corporate governance law and culture in China’s H-share market. A story emerges not of tensions between ideas of corporate governance from two different legal systems – Hong Kong vs mainland Chinese – nor about legal convergence as China adopts concepts from Anglo-American jurisdictions. Rather, it is a story of individual firms being pragmatic in mediating the different agendas of state-agencies that own or control them.
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Alice de Jonge


Corporate governance outcomes are the result of complex interactions between institutions that differ according to the cultural, social and economic conditions in which they emerge. According to Mark Roe, a socialist political system should produce an ‘insider’ system of corporate ownership and control. An insider system is said to be one where shareholding is said to be concentrated in the hands of blockholders, and where shareholders and creditors are more actively involved in the control of companies. Insider systems, with Japan and Germany being the two ‘typical’ examples used to illustrate these features, are also said to be characterized by the relative unimportance of the securities market as a source of finance. The principal sources of finance are banks, families, non-financial corporations and the state. Insider systems are typically contrasted with AngloAmerican ‘outsider’ systems,1 which are characterized by a securities market with dispersed shareholdings, and where shareholders and companies interact on an arm’s-length basis, largely determined by market forces. In light of its Anglo-colonial history and inheritance, the temptation is to categorize Hong Kong amongst those jurisdictions with an ‘outsider’ system of ownership and control. Recent research on the importance of family-controlled block shareholdings in Hong Kong, however, may tend to cast doubt upon such an automatic categorization. In the Australian context, Alan Dignam and Michael Galanis have revealed features of the Australian system of corporate governance that suggest the listed market there has been mis-characterized as an outsider system, when, in reality, it tends more towards...

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