Financial Transparency and Disclosure: China Progress on Corporate Governance

Abstract

Recent negative publicity regarding fraud in Chinese public companies that entered the U.S. markets via reverse mergers has tended to paint all Chinese companies with the same toxic brush. Such capital markets’ cynicism regarding Chinese listed companies is overblown and counterproductive. A recent study has shown that the performance of Chinese companies, when compared to their peers in the U.S. reverse merger market, was actually superior to their Western company counterparts. Notwithstanding, much can be done to improve important aspects of corporate transparency and disclosure in China. The authors examine corporate governance issues particularly endemic to China and offer observations to ameliorate perceived market dysfunction while building a bridge towards greater global capital market efficiency.