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International Listing as a Mechanism of Commitment to More Credible Corporate Governance Practices: the case of the Bank of China (Hong Kong)

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Author Info

  • Laixiang Sun

    (Department of Financial and Management Studies, SOAS, University of London, Thornhaugh Street, Russell Square, London WC1H 0XG, UK.)

  • Damian Tobin

    (Department of Financial and Business Studies, School of Oriental and African Studies, University of London)

Abstract

This paper argues that the deeply rooted cause of poor corporate governance practices in China's state-owned banks is the discretion enjoyed by policy makers to re-optimise their policy choices when they deem necessary and the consequent moral hazard leading to opportunistic behaviours of bank managers. By examining the case of Bank of China Hong Kong (BoCHK), the paper suggests that international listing can provide an effective mechanism to mitigate the consequence of discretionary policies and managerial opportunism at home because the company is now disciplined and regulated by a more developed capital market outside the home jurisdiction. It shows that BoCHK's IPO preparation and first two years of listing on Hong Kong Stock Exchange (HKSE) have induced in-depth corporate restructuring and noticeable improvement in governance practices. Copyright Blackwell Publishing Ltd 2005.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Corporate Governance: An International Review.

Volume (Year): 13 (2005)
Issue (Month): 1 (01)
Pages: 81-91

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Handle: RePEc:bla:corgov:v:13:y:2005:i:1:p:81-91

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0964-8410&site=1

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Cited by:
  1. Tobin, Damian & Sun, Laixiang, 2009. "International Listing as a Means to Mobilize the Benefits of Financial Globalization: Micro-level Evidence from China," World Development, Elsevier, vol. 37(4), pages 825-838, April.

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