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Jumat, 26 Juli 2019 07:29:00

CUHK Business School Reveals How Court Transparency in China is Biased by Politics and How the Bias Has Economic Consequences

HONG KONG, RIAUONE.com - 25 July 2019 - Researchers say the Chinese government has suppressed more than 60 percent of the judicial disclosures in litigation cases involving public limit companies -- even though such disclosures have been required by law since 2014.
 
The study "Transparency in an Autocracy: China's 'Missing Cases' in Judicial Opinion Disclosure" reveals evidence that the Chinese courts' disclosure decisions are subject to political influence from the executive branch of the government, with the suppression of judicial disclosures stronger among state-owned enterprises (SOEs) and businesses located in the same province as the courts.
 
"This is consistent with the notion that courts are more likely to protect SOEs and firms that are located within their own provinces," says Prof. Tianyu Zhang, Professor of School of Accounting at The Chinese University of Hong Kong (CUHK) Business School. "Public disclosure of the judicial opinions may raise people's attention about the firms and prevent government leaders from showing favoritism to them."
 
Prof. Zhang who has recently been named the second most prolific author by Abacus, with six papers on the Chinese capital market published in Tier 1 journals and a total of 2,493 citations during the 1999-2018 period.
 
In collaboration with Prof. Zhang, the research team features Prof. Zhuang Liu, Assistant Professor of Law and Economics at CUHK-Shenzhen; Prof. T.J. Wong, Joseph A. DeBell Professor of Business Administration and Professor of Accounting at University of Southern California Marshall School of Business; and Prof. Yi Yang, Assistant Professor of Accounting at the Southwestern University of Finance and Economics, Chengdu.
 
The team collected a sample of companies' mandated disclosures, involving 5,370 litigation cases between 2008 and 2016. They then tracked down the judicial disclosures of these cases on the courts' online platform, either through the case serial numbers or the names of the parties involved. And they found that only 37 percent of the cases were disclosed by the courts.
 
"This shows that the Chinese government is suppressing most of the judicial disclosures, even though they are required by the Supreme People's Court (SPC) of China," says Prof. Zhang.
 
Political Incentives Behind Transparency
To discover whether their results were driven by local leaders' political incentives, the team examined whether the court decisions were determined by the political and economic status of the firms.

"We believe local governments show greater favoritism to those firms that contribute large tax revenues to the province, or are large in size, and so therefore provide the province with significant employment," says Prof. Zhang. (roc/red/*) #for information on collaboration publications, questions and other e-mails riauonemedia@gmail.com
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