IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v64y2024ics1544612324005361.html
   My bibliography  Save this article

Reforming private securities litigation in China: Does private enforcement by minority shareholders matter to corporate fraud?

Author

Listed:
  • Li, Lu
  • Zheng, Gaoping
  • Zhong, Angel

Abstract

Leveraging the pilot initiative on the diversified resolution mechanism for private securities litigation in China, our study explores the impact of private securities litigation by minority shareholders on corporate fraud. Employing a difference-in-differences analysis over the period 2010–2018, we observe a substantial reduction of 16.4 % in corporate fraud. This effect is particularly pronounced in companies with political connections and those characterized by weaker internal governance structures. Further analysis indicates a diminishing gap in corporate fraud between pilot and non-pilot firms after the nationwide expansion of the pilot program. These findings carry significant policy implications, particularly for emerging markets seeking to enhance protection for minority shareholders.

Suggested Citation

  • Li, Lu & Zheng, Gaoping & Zhong, Angel, 2024. "Reforming private securities litigation in China: Does private enforcement by minority shareholders matter to corporate fraud?," Finance Research Letters, Elsevier, vol. 64(C).
    • Handle: RePEc:eee:finlet:v:64:y:2024:i:c:s1544612324005361
    DOI: 10.1016/j.frl.2024.105506
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612324005361
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2024.105506?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

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

    More about this item

    Keywords

    Private securities litigation; Minority shareholders; Corporate fraud; Corporate governance;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

    Statistics

    Access and download statistics

    Corrections

    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:eee:finlet:v:64:y:2024:i:c:s1544612324005361. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.