IDEAS home Printed from
   My bibliography  Save this article

International Jurisdictional Competition under Globalization: From the U.S. Regulation of Foreign Private Issuers to Taiwan's Restrictions on Outward Investment in Mainland China


  • Tsai Chang-hsien


Drawing a lesson from the story that the Sarbanes-Oxley Act drives away foreign issuers and then their physical exit provokes a change in the U.S. regulation of non-U.S. issuers, this article takes as another case study the phenomenon that Taiwanese firms list shares overseas, to further test how usual law market demand and supply forces (or underlying exit and voice rights) interplay under international jurisdictional competition. Put simply, both cases of the U.S. and Taiwan significantly elaborate that law market forces underlying international jurisdictional competition are similarly at work even on both sides of the Pacific Ocean. Specifically, globalization strengthens the mobility of international production factors, and thus lowers firms costs of exiting from a given jurisdiction, which also fuels international jurisdictional competition for mobile firms or capital. Therefore, on the demand side of the international law market, if a regulating jurisdiction ignores business demands and imposes excessive regulation, firms would exit physically or threaten to exit in response. This means that the buyer side of the law market starts to operate and then sparks the seller side. On the international supply side, other jurisdictions as sellers would compete for these exiting firms corporate charters, listings and other related economic transactions by providing cost-effective regulatory products, to secure greater benefits to the local economy. Such economic exits send out signals to those in the political marketplace within the regulating jurisdiction, and thus activate interest group competition, or the domestic supply side. In consequence, firms, via these law market forces, exert pressure on the regulatory government to engage in a quest for more legal flexibility, or to liberalize unnecessarily excessive regulation.

Suggested Citation

  • Tsai Chang-hsien, 2011. "International Jurisdictional Competition under Globalization: From the U.S. Regulation of Foreign Private Issuers to Taiwan's Restrictions on Outward Investment in Mainland China," Asian Journal of Law and Economics, De Gruyter, vol. 2(1), pages 1-102, April.
  • Handle: RePEc:bpj:ajlecn:v:2:y:2011:i:1:n:5

    Download full text from publisher

    File URL:
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Lundin, Nannan & Sjöholm, Fredrik & He, Ping & Qian, Jinchang, 2007. "FDI, Market Structure and R&D Investments in China," Working Paper Series 708, Research Institute of Industrial Economics.
    2. Karlsson, Sune & Lundin, Nannan & Sjöholm, Fredrik & He, Ping, 2007. "FDI and Job Creation in China," Working Paper Series 723, Research Institute of Industrial Economics.
    3. Banzhaf, H. Spencer & Walsh, Randy, 2006. "Do People Vote with Their Feet? An Empirical Test of Environmental Gentrification," Discussion Papers dp-06-10, Resources For the Future.
    4. Roberta Romano, 1998. "Empowering Investors: A Market Approach to Securities Regulation," Yale School of Management Working Papers ysm74, Yale School of Management.
    5. anonymous, 2007. "China's banking sector," Asia Focus, Federal Reserve Bank of San Francisco, issue Mar.
    6. Xinhua He & Yongfu Cao, 2007. "Understanding High Saving Rate in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 15(1), pages 1-13.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:ajlecn:v:2:y:2011:i:1:n:5. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.