An Empirical Analysis of the Public Enforcement of Securities Law in China: Finding the Missing Piece to the Puzzle

Xu, Weihua; Chen, Jianwei; Xu, Guangdong

doi:10.2139/ssrn.2728803

Cited by 1 publication

(1 citation statement)

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“…However, it is also characterized by its comparatively inadequate legal system and weak protection for shareholder (Allen et al, 2005). In China, the current legal system as well as the private enforcement of law is not forceful enough to well ensure investors" interest and prevent potential fraudulent activities (Xu et al, 2017). In addition, compare with the amounts involved in fraud cases, the minor fines handed down by the CSRC seem to be ineffective to deter misconducts so that securities law in China tend to have low impacts (Wang, 2018).…”

Section: Introductionmentioning

confidence: 99%

Study on the monitoring role of institutional investors in deterring accounting fraud

Chu¹,

Xiong²

2021

J. Account. Taxation

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The topic about institutional investor being a monitoring role has been widely discussed but different results exist in previous empirical studies. Along with their progressively development, institutional investors are now playing more important role in Chinese capital market. Using samples from Chinese capital market, this paper collects fraud data and data of mutual funds' ownership in listed firms between 2008 and 2015 to examine the monitoring function of institutional investors against accounting fraud. To go deep into the monitoring incentives of investors that fall into different categories, mutual funds are further classified as heterogeneous groups according to their investment strategy and investment durations. The monitoring role of mutual funds in different groups and their influence as the disincentive to accounting fraud of listed firms are investigated in the paper. Mutual fund ownership is found to be able to curb the incidence of accounting fraud. Active mutual funds are able to conduct more effective monitoring when compared with passive mutual funds. It is also reported that short-term mutual funds are more significant than long-term mutual funds in monitoring. Policy makers may need to normalize institutional investments by quantified indicators or in other reasonable ways.

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Section: Introductionmentioning

confidence: 99%