IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v13y2021i15p8589-d606713.html
   My bibliography  Save this article

Trends and Development of the Directors’ Duty of Loyalty in China: A Case Analysis

Author

Listed:
  • Shuangge Wen

    (Centre for Jurisprudence Research, School of Law, Jilin University, Changchun 130012, China
    Institute of International Shipping and Trade Law, Swansea University, Swansea SA2 8PP, UK)

  • Jingchen Zhao

    (Centre of Corporate and Insolvency Law, Nottingham Law School, Nottingham Trent University, Nottingham NG1 4FQ, UK
    School of Law, Guangdong University of Finance & Economics, Guangzhou 510320, China)

Abstract

Covering a central theme in corporate law development, this paper discusses the pragmatic utility of the common-law-originated duty of loyalty of company directors in the civil law context of China. The reception of legal transplantation in a host environment remains a contentious theme, and it seems to be an opportune time to study relevant cases that have been adjudicated since China’s statutory inauguration of the directors’ duty of loyalty in 2005, in the sense that more than 10 years of practice has resulted in ample evidence on the practical effects of this transplanted duty. Through an analysis of 526 cases on the basis of eight attributes, we discovered some commendable features, including increasing accessibility of the law and a differentiation of various types of directors’ duties of loyalty. Meanwhile, the selective adoption norm customary to Chinese culture has to a certain extent compromised the intended goals of greater legislative clarity, judicial consistency and in turn balanced and sustainable businesses, demonstrated in several incompatibilities between transplanted duties and domestic legal institutions. Reshaping the conventional transplantation ideal that commercial laws are easily transferable, the paper suggests the construction of a broad collateral regime for greater congruence between laws and existing institutions.

Suggested Citation

  • Shuangge Wen & Jingchen Zhao, 2021. "Trends and Development of the Directors’ Duty of Loyalty in China: A Case Analysis," Sustainability, MDPI, vol. 13(15), pages 1-27, August.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:15:p:8589-:d:606713
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/13/15/8589/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/13/15/8589/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gary S. Becker & George J. Stigler, 1974. "Law Enforcement, Malfeasance, and Compensation of Enforcers," The Journal of Legal Studies, University of Chicago Press, vol. 3(1), pages 1-18, January.
    2. Chen, Zhiwu, 2003. "Capital markets and legal development: The China case," China Economic Review, Elsevier, vol. 14(4), pages 451-472.
    3. Henry Hansmann & Reinier Kraakman, 2000. "The End Of History For Corporate Law," Yale School of Management Working Papers ysm136, Yale School of Management, revised 01 Feb 2001.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Antonio Acconcia & Marcello D'Amato & Riccardo Martina, 2003. "Corruption and Tax Evasion with Competitive Bribes," CSEF Working Papers 112, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    2. Jeremy T. Fox, 2010. "Estimating the Employer Switching Costs and Wage Responses of Forward-Looking Engineers," Journal of Labor Economics, University of Chicago Press, vol. 28(2), pages 357-412, April.
    3. Michael Waldman, 1990. "A Signalling Explanation for Seniority Based Promotions and Other Labor Market Puzzles," UCLA Economics Working Papers 599, UCLA Department of Economics.
    4. Daron Acemoglu & Matthew O. Jackson, 2017. "Social Norms and the Enforcement of Laws," Journal of the European Economic Association, European Economic Association, vol. 15(2), pages 245-295.
    5. Alessandro Marra & Alessandro Sarra, 2010. "Incomplete antitrust laws and private actions for damages," European Journal of Law and Economics, Springer, vol. 30(2), pages 111-135, October.
    6. Galletta, Sergio, 2017. "Law enforcement, municipal budgets and spillover effects: Evidence from a quasi-experiment in Italy," Journal of Urban Economics, Elsevier, vol. 101(C), pages 90-105.
    7. Marco Pagano & Paolo F. Volpin, 2005. "The Political Economy of Corporate Governance," American Economic Review, American Economic Association, vol. 95(4), pages 1005-1030, September.
    8. Shijie Lu & Xin (Shane) Wang & Neil Bendle, 2020. "Does Piracy Create Online Word of Mouth? An Empirical Analysis in the Movie Industry," Management Science, INFORMS, vol. 66(5), pages 2140-2162, May.
    9. Toru Yoshikawa & Lai Si Tsui-Auch & Jean McGuire, 2007. "Corporate Governance Reform as Institutional Innovation: The Case of Japan," Organization Science, INFORMS, vol. 18(6), pages 973-988, December.
    10. Dhammika Dharmapala & Richard H. McAdams & John Rappaport, 2019. "Collective Bargaining and Police Misconduct: Evidence from Florida," CESifo Working Paper Series 7718, CESifo.
    11. Kofman, Fred & Lawarree, Jacques, 1996. "On the optimality of allowing collusion," Journal of Public Economics, Elsevier, vol. 61(3), pages 383-407, September.
    12. Marjit, Sugata & Mukherjee, Vivekananda & Mukherjee, Arijit, 2000. "Harassment, corruption and tax policy," European Journal of Political Economy, Elsevier, vol. 16(1), pages 75-94, March.
    13. Peter T. Leeson, 2009. "The Laws of Lawlessness," The Journal of Legal Studies, University of Chicago Press, vol. 38(2), pages 471-503, June.
    14. Lambsdorff, Johann Graf & Grubiak, Kevin & Werner, Katharina, 2023. "Intrinsic Motivation vs. Corruption? Experimental Evidence on the Performance of Officials," MPRA Paper 118153, University Library of Munich, Germany.
    15. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 2006. "Bank supervision and corruption in lending," Journal of Monetary Economics, Elsevier, vol. 53(8), pages 2131-2163, November.
    16. Mudambi, Ram & Paul, Chris, 2003. "Domestic drug prohibition as a source of foreign institutional instability: an analysis of the multinational extralegal enterprise," Journal of International Management, Elsevier, vol. 9(3), pages 335-349.
    17. Qu, Guangjun & Sylwester, Kevin & Wang, Feng, 2016. "Anticorruption and Growth: Evidence from China," MPRA Paper 72190, University Library of Munich, Germany.
    18. Miceli, Thomas J., 2007. "Criminal solicitation, entrapment, and the enforcement of law," International Review of Law and Economics, Elsevier, vol. 27(2), pages 258-268.
    19. Said-Nour Samake, 2022. "Prudential Regulation and Bank Efficiency : Evidence from WAEMU Zone," Working Papers hal-03540209, HAL.
    20. Lurdes Martins & Jorge Cerdeira & Aurora A.C. Teixeira, 2020. "Does corruption boost or harm firms’ performance in developing and emerging economies? A firm‐level study," The World Economy, Wiley Blackwell, vol. 43(8), pages 2119-2152, August.

    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:gam:jsusta:v:13:y:2021:i:15:p:8589-:d:606713. 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.

    If CitEc recognized a bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.