5. Insider Trading and Investor Protection

The CSRC, What do we do? http://​www.​csrc.​gov.​cn/​pub/​csrc_​en/​ accessed on 27/01/2017.

Adolf A. Berle and Gardiner C. Means, The Modern Corporation and Private Property (Harcourt, Brace & World, INC, 2 ed, 1967) 286.

OECD Principles of Corporate Governance, https://​www.​oecd.​org/​corporate/​ca/​corporategoverna​nceprinciples/​31557724.​pdf accessed on 17/04/2017.

Kurt A Hohenstein, Fair To All People: The SEC and the Regulation of Insider Trading, http://​www.​sechistorical.​org/​museum/​galleries/​it/​ accessed on 14/01/2016.

SEC History Society, Raising the Stakes, Corporate Take-Overs and Insider Trading Scandals in the 1980s, http://​www.​sechistorical.​org/​museum/​galleries/​it/​raisingStakes_​a.​php accessed on 17/04/2017.

James Haggerty, Insider Trading and Public Perception, 2010. http://​prcg.​com/​insider-trading-and-public-perception-updated/​ accessed on 27/04/2017.

James D. Cox, Robert W. Hillman and Donald C. Langevoort, Securities Regulation Cases and Materials (5 ed, 2006) 879.

Kurt A Hohenstein, Fair To All People: The SEC and the Regulation of Insider Trading, http://​www.​sechistorical.​org/​museum/​galleries/​it/​ accessed on 4/05/2016.

The United States Subcommittee on Securities of the Senate Committee on Securities, Housing and Urban Affairs100th Congress, 1st Session (1987) Oversight of the Securities and Exchange Commission and the Securities Industry, 5.

Insider Trading, Hearing Before the Subcommittee on Telecommunications and Finance of the House Committee on Energy and Commerce, 100th Congress, 2nd Session (1988), 2; James B. Stewart, Den of Thieves (Simon & Schuster: New York, 1991).

United States v. O’Hagan, 521 U.S. 642, 651–52 (1997), 2207.

Derek Botha, Control of insider trading in South Africa: A comparative analysis, 3 South Africa Mercantile L.j. 1, 1991.

Barry Rider, The control of insider trading- smoke and mirrors, Journal of Financial Crime, Vol. 7, Issue 3, 227.

Rider, B., Abrams, C. and Ashe, T.M, CCH Guide to Financial Services Regulation, 3rd edition, CCH, Chapter 1.

The common law rules on insider trading are discussed in Freeman v. Decio, 584 F.2d 186, 191–95 (7th Cir. 1978).

MP Dooley, Enforcement of Insider Trading Restrictions, 66 VA. L. REV. 1 (1980).

Dennis W. Carlton and Daniel R. Fischel, The Regulation of Insider Trading, Stanford Law Review, Vol. 35, No. 5 (May, 1983), pp. 857–895.

Henry Manne, Insider trading and the stock market, 1966, New York, The Free Press.

Harry McVea, ‘What’s Wrong With Insider Dealing?’ (1995) (5) Legal Studies 390.

Dooley, Enforcement of Insider Trading Restrictions, 66 VA. L. REV. 1 (1980).

Dennis W. Carlton and Daniel R. Fischel, The Regulation of Insider Trading, Stanford Law Review, Vol. 35, No. 5 (May, 1983), pp. 857–895.

Barry Rider and H. French, The regulation of insider trading (1979) London, Macmillan.

Dennis W. Carlton and Daniel R. Fischel, The Regulation of Insider Trading, Stanford Law Review, Vol. 35, No. 5 (May, 1983), pp. 857–895.

Thomas C. Newkirk, Melissa A. Robertson, Insider Trading –A U.S. Perspective, at 16th International Symposium on Economic Crime, Jesus College, Cambridge, England, September 19, 1998, http://​www.​sec.​gov/​news/​speech/​speecharchive/​1998/​spch221.​htm accessed 15/01/2016.

‘Non-public information’ is information that is not available in press releases, SEC filings, and other public reports (U.S. v. Contorinis, Docket No. 11-3-cr (2nd Cir. Decided Aug. 17, 2012).). ‘Material’ information is information which a reasonable investor would have considered significant in deciding whether to buy, sell, or hold securities (TSC CORP. v. Northway, SEC v. Bausch & LOMB Inc., 565F.2d 8, 18 (2n Cir 1977), U.S. v. Contorinis, Docket No. 11-3-cr (2nd Cir. Decided Aug. 17, 2012).).

Colin S. Diver, ‘A theory of Regulatory Enforcement’ (1980) 28(3) Public Policy 257. See also ‘The Investor’s Advocate: How the SEC Protects Investors and Maintains Market Integrity’, December 1999.

Ana Carvajal and Jennifer Elliott, Strengths and Weaknesses in Securities Market Regulation: A Global Analysis, https://​www.​imf.​org/​external/​pubs/​ft/​wp/​2007/​wp07259.​pdf accessed on 20/03/2017.

Colin S. Diver, ‘A theory of Regulatory Enforcement’ (1980) 28(3) Public Policy 257, 262.

Colin S. Diver, ‘A theory of Regulatory Enforcement’ (1980) 28(3) Public Policy 257, 259.

K. Viscusi, ‘The impact of occupational safety and health regulation’, Bell Journal of Economics. Another measure is the extent of the agency’s presence in the regulated sector. Increasing the extensiveness and intensiveness of surveillance activities becomes an end in itself. Colin S. Diver, ‘A theory of Regulatory Enforcement’ (1980) 28(3) Public Policy 257, 277. Enforcement efforts can be measured either in terms of inputs which are resources given to the regulator (i.e. budget and staff size) or outputs which refers to what they do with those resources (i.e. enforcement actions brought or financial sanctions levied). Jr. John C. Coffee, ‘Law and the Market: The Impact of Enforcement’ (304, The Centre for Law and Economic Studies, Columbia University School of Law, 2007). The intensity of enforcement by the regulator is manifested in ways of (1) conducting market surveillance; (2) investigating individual firms for wrongdoing; (3) bringing enforcement actions (including those that result in large financial penalties or criminal imprisonment); and (4) writing or rewriting regulatory rules. Howell E. Jackson and Mark J. Roe, ‘Public and private enforcement of securities laws: Resource-based evidence’ (2009) 93(2) Journal of Financial Economics 209.

Howell E. Jackson and Jeffery Y. Zhang, Private and Public Enforcement of Securities Regulation, in The Oxford Handbook of Corporate Law and Governance, Edited by Jeffrey Gordon and Wolf-Georg Ringe.

Jon G. Suitinen and K. Kuperan, ‘A socio-economic theory of regulatory compliance’ (1999) 26 International Journal of Social Economics 183.

Gary S. Becker, Crime and Punishment: An Economic Approach, National Bureau of Economic Research (1968).

Jon G Sutinen and K Kuperan, ‘A socio-economic theory of regulatory compliance’ (1999) 26 International Journal of Social Economics.

Enforcement and compliance with fisheries regulations in Malaysia, Indonesia and the Philippines, K.Kuperan Viswanathan Iclarm, Nik Mustapha Raja Abdullah, Indah Susilowati, Ida M. Siason, Cynthia Ticao, Proceedings of the International Workshop on Fisheries Co-management: http://​pubs.​iclarm.​net/​Pubs/​Way%20​Forward/​18%20​Kuperan.​pdf accessed on 29/03/2017.

Some research shows increases in the volume of insider trading activity over time after the increased statutory sanctions. See H. Nejat Seyhun, The effectiveness of the insider-trading sanctions, Journal of Law & Economics 35 J.L. & Econ. (1992).

There were provisions in the regulations which prevented company officers and other insiders from taking advantage of their positions. See Company Law 1993.

CSRC, Zhang Jiajie (1997), Wang Chuang (1998), Dai Lihui (1999), China Qingqi Group (1999), Beida Group (1999), Yu Mengwen (1999), Nanfang Securities (1999), Beida Chehang (1999), Fushan Dianqi (1999), and Shenzhen Teyu (1999), http://​www.​csrc.​gov.​cn/​pub/​zjhpublic/​ accessed on 19/01/2016.

The Shenzhen Stock Exchange, Information Disclosure of Major Events and Fluctuations of Stock Price in China’s Stock Markets, 2001.

CSRC, Administrative Penalty Decision (Li Jibing and Huang Wenfeng) http://​www.​csrc.​gov.​cn/​pub/​zjhpublic/​G00306212/​201105/​t20110504_​195069.​htm accessed on 19/1/2016.

The upper limits for monetary penalties of RMB 30,000 and RMB 300,000 are unrealistic in regard to insider trading. The figures need to be increased to commensurate with wider economic conditions.

Administrative Penalties Law, s 12.

The Criminal Law 1997 amendments.

One case was prosecuted in 2007; one in 2008; four in 2009; five in 2010; and eleven in 2011. See the High People’s Court, Applications of Interpretations on Legal Issues Relating Insider trading, Divulging insider information (2012) 2012, http://​www.​court.​gov.​cn/​shenpan-xiangqing-4709.​html accessed on 21/01/2016.

The High People’s Court, the Supreme People’s Procuratorate, Ministry of Public Security, and the CSRC, Notice on Cracking Down on Illegal Securities Activities, 2008, http://​www.​csrc.​gov.​cn/​pub/​hebei/​xxfw/​tzzsyd/​200812/​t20081215_​68686.​htm accessed on 26/04/2017.

Mass incidents revolve around economic or social grievances which are generated by rapid socioeconomic transformation and poor quality of local governance For a detailed analysis, see Yanqi Tong* and Shaohua Lei, Large-Scale Mass Incidents and Government Responses in China, Internatinal Journal of China Studies, Vol. 1, No. 2, 2010.

CSRC, Insider Trading Education Exhibition, http://​www.​csrc.​gov.​cn/​pub/​newsite/​jiancj/​jywlz/​bjxs.​html accessed on 15/01/2016.

Rules on the Supreme People’s Procuratorate and the Ministry of Public Security’s Filing and Prosecution Standards of Criminal Cases No. 2 (2010).

Interpretations on Legal Issues Relating Insider trading, Divulging insider information (2012).

Nicholas Calcina Howson, ‘Enforcement without Foundation?- Insider Trading and China’s Administrative Law Crisis’ (2012) 60 The American Journal of Comparative Law 985.

Provisions on Prohibition from Access to the Securities Market (2015) s 13.

Prohibition from: ‘continuing his or her securities practice in the institution where he or she worked; continuing to serve as the director, supervisor, or senior executive of the listed company or non-listed public company where he or she worked; engaging in the securities practice in any other institution; or serving as the director, supervisor, or senior executive of any other listed company or non-listed public company. The person should immediately cease any securities practice or the performance of his or her duties as a director, supervisor, or senior executive of a listed company or a non-listed public company, and the institution where he or she works shall dismiss him or her from his or her post under the prescribed procedures.’ Article 4 Article 13 Provisions on Prohibition from Access to the Securities Market (2015).

For example, in 2012, the CSRC completed 77 investigations into cases where laws and regulations were violated; eight decisions were made to remove individuals from the market.

In terms of commercial negotiation, consultation, and so on.

Rules on Listed Companies Establishing Registration System for Persons that Know Insider Information 2011, s 8.

Rules on Listed Companies Establishing Registration System for Persons that Know Insider Information 2011, s 13.

Rules on Steering Group on Cracking Down upon Illegal Securities Activities, 2007.

The High People’s Court, the Supreme People’s Procuratorate, Ministry of Public Security, and the CSRC, Notice on Cracking Down on Illegal Securities Activities, 2008, http://​www.​csrc.​gov.​cn/​pub/​hebei/​xxfw/​tzzsyd/​200812/​t20081215_​68686.​htm accessed on 26/04/2017.

CSRC, The functions of Enforcement Team, http://​www.​csrc.​gov.​cn/​pub/​newsite/​jczd/​ accessed on 10/03/2016.

CSRC, the functions of the Enforcement Bureau, http://​www.​csrc.​gov.​cn/​pub/​newsite/​jcj/​ accessed on 10/03/2016.

China University of Political Science and Law, Securities Regulatory Bodies legal Mechanisms, Securities Forum, 1, 2014, 437.

Securities Law, section 115.

CSRC, Insider Trading Warning and Education Exhibition, http://​www.​csrc.​gov.​cn/​pub/​newsite/​jiancj/​jywlz/​zfxd.​html accessed on 10/03/2016.

Securities Law, section 180.

See (in CSRC), cases such as Jiang Huazhang (2010), Zhang Xiaojian (2010), Deng Huiwen (2014), Tan Shuzhi (2013), and so on.

For example, in 2016, the regulator used communication records as evidence in 53 out of 62 cases where an Administrative Penalty was imposed.

CSRC, Insider Trading Warning and Education Exhibition, http://​www.​csrc.​gov.​cn/​pub/​newsite/​jiancj/​jywlz/​zfxd.​html accessed on 10/03/2016.

CSRC, Insider Trading Education Exhibition, http://​www.​csrc.​gov.​cn/​pub/​newsite/​jiancj/​jywlz/​bjxs.​html accessed on 15/01/2016.

CSRC, Insider Trading of Feng etc., http://​www.​csrc.​gov.​cn/​pub/​newsite/​jcj/​aqfb/​201303/​t20130325_​222600.​html accessed on 15/01/2016.

Measures for the Administration of the Material Asset Restructuring of Listed Companies (2014).

CSRC, Insider Trading Education Exhibition, http://​www.​csrc.​gov.​cn/​pub/​newsite/​jiancj/​jywlz/​zfxd.​html accessed on 15/01/2016.

Caijing, interview with the CSRC Enforcement Director, Xiao, 2015.

CSRC, Reporting non-compliance activities, http://​jubao.​csrc.​gov.​cn/​ accessed 15/01/2016.

Qiang Wenyan, Comparative studies of Insider Trading Crime, Journal of Hubei University of Police, 2015, 1, 63.

Shanghai Stock Exchange, 2014 Stock Markets, Securities Forum, 2015, 1, 458.

Caijing, Xinguangxia Trap, Caijing, Aug 2001.

CSRC, Administrative Penalty (Yinguangxia), http://​www.​csrc.​gov.​cn/​pub/​zjhpublic/​G00306212/​200804/​t20080418_​14333.​htm?​keywords=​%E9%93%B6%E5%B9%BF%E5%A4%8F accessed on 27/04/2017.

Liu Xianquan, Ruan Chuansheng, Thoughts on Yiguangxia Incident, Journal of East China University of Political Science and Law, 2002, 1, 12.

China Economic Weekly, CITIC insider trading investigation: National Audit Office, 2015-09-17.

Wu Weiying and Pu Lifeng, 2009 China Securities Law, Securities Law Forum, 2010, 1, p. 361.

National Audit Office, Auditing Securities Companies’ insider trading activities (2013), http://​www.​audit.​gov.​cn/​n6/​n41/​c20984/​content.​html accessed on 11/04/2017.

SEC Announces Enforcement Results for FY 2016, https://​www.​sec.​gov/​news/​pressrelease/​2016-212.​html; SEC Announces Enforcement Results For FY 2015, https://​www.​sec.​gov/​news/​press-release/​2014-230; SEC’s FY 2014 Enforcement Actions Span Securities Industry and Include First-Ever Cases, https://​www.​sec.​gov/​news/​pressrelease/​2015-245.​html accessed on 23/03/2017.

Hong Kong Exchanges and Clearing Limited, Table A – Market Capitalisation of the World’s Top Stock Exchanges (As at end December 2016), http://​www.​sfc.​hk/​web/​EN/​files/​SOM/​MarketStatistics​/​a01.​pdf accessed on 23/03/2017.

Robert K. Merton, ‘Social Structure and Anomie’ (1938) 3(5) American Sociological Review 681.

Hongming Cheng, Financial Crime in China, Developments, Sanctions, and the Systemic Spread of Corruption (Palgrave Macmillan, 2016) 139.

Stanley Lubman, ‘Looking for law in China’ (2006) 20(1) Columbia Journal of Asian Law.

Several interviewees proffered the issue of culture in relation to insider trading.

Guo Ruiming, Enforcement Bureau, CSRC, Listed Companies Insider Trading Prevention-Regulation and Case Analysis, 2014.

Media Conference on Financial Reform and Development 2014/3/11.

The CSRC, Delegating the State Council IPO registration System Reform and the Application of the Securities Law 2015, http://​www.​csrc.​gov.​cn/​pub/​newsite/​zjhxwfb/​xwdd/​201512/​t20151227_​288668.​html accessed on 2/11/2016.

Shanghai Stock Exchange, Shanghai-Hong Kong Connect, http://​edu.​sse.​com.​cn/​col/​shhkconnect/​intro/​intro/​ accessed on 2/11/2016.

The State Council, Suggestions on Pushing Forward Entrepreneur and Innovation 2015, http://​www.​gov.​cn/​zhengce/​content/​2015-06/​16/​content_​9855.​htm accessed on 29/03/2016.

Beijing Evenings, 2016/03/15.

It was ostensibly intended to provide investors with time to evaluate market prices and reconsider the reasonableness of their investing behaviour. The adoption of the circuit breaker in China was largely in response to the 25 June 2015 stock clash. The circuit breaker mechanism had been previously adopted in US markets in 1988 partly in response to the 1987 Black Monday event, and was only triggered once in America, in 1997.

In China, the rule was invoked on 4 January, the first trading day of 2016. The day’s trading was suspended when the index fell more than 7% in the early afternoon. The occurrence was repeated on 7 January when the index had fallen by 5% at 9.42 a.m. When the market resumed at 9.57 a.m. after 15 minutes’ break, the index fell a further 2.21%. This led to the closure of the market for the day. On 7 January, the exchanges announced the suspension of the application of the market wide circuit breaker with effect from 8 January.

There are two kinds of circuit breakers: a single-stock circuit breaker and a market-wide circuit breaker. What we are referring to here is the latter. Circuit breaker mechanisms have been adopted by other developed economies including Australia and the USA. According to the ASX, ‘this process allows the market to draw pause after an extreme price movement and for supply and demand to return to the market’. Essentially, it serves as a cooling-off period during which investors re-evaluate and reconsider their investing behaviour. Some researchers around 1990 cast doubts on the effect of circuit-breakers. On 27 October 1997, the breaker was triggered for the first and only time in US history when the Dow Jones Industrial Average fell 7.2%. Trading was suspended for the day on all major US stock exchanges. According to SEC, ‘on October 28, market prices initially resumed their decline before rallying sharply’.

That the circuit breaker was intended to reduce volatility seems to be the accepted view. It is possible that the measure has been put in place to limit market declines until a certain date (the date of its discontinuance). The mechanism was discontinued in China because, instead of cooling the market, investors jumped in selling as soon as the market opened on the second day in the fear that they might be shut out. Partially, a lot of Chinese investors were heavily leveraging on margin loans and when the market fell, margin calls were made, and the investors had to sell part of the investment to raise cash. Temporary suspension could probably delay their selling but could not stop them cashing in as soon as the market opened.

CITIC Securities, The Chairman of the CSRC, Liu Shiyu, on Capital Markets Reforms, http://​www.​cs.​ecitic.​com/​news/​newsContent.​jsp?​docId=​3468722 accessed on 20/02/2017.

CITIC Securities, The Chairman of the CSRC, Liu Shiyu, on Capital Markets Reforms, http://​www.​cs.​ecitic.​com/​news/​newsContent.​jsp?​docId=​3468722 accessed on 20/02/2017.

Liu Shiyu, News Briefing at the State Council Information Office, 26/02/2017.

The Chairman of the CSRC, Liu Shiyu, Speech at National securities and futures regulatory works conference, 10/02/2017.

CSRC, The CSRC on 2016 Administrative Penalties, http://​www.​csrc.​gov.​cn/​pub/​newsite/​zjhxwfb/​xwdd/​201612/​t20161230_​308832.​html accessed on 27/01/2017.

Those policies were in response to the 2015 stock market crash. They were published on 4/07/2015 via the CSRC’s Wechat, http://​www.​weibo.​com/​csrcfabu?​sudaref=​www.​baidu.​com&​retcode=​6102&​is_​hot=​1 accessed on 7/02/2017. For example, IPO was resumed in Nov 2015 see News Conference on 6/11/2015, http://​www.​csrc.​gov.​cn/​pub/​newsite/​zjhxwfb/​xwfbh/​201511/​t20151106_​286093.​html accessed on 7/02/2017.

CSRC, http://​www.​csrc.​gov.​cn/​pub/​newsite/​ accessed on 28/04/2017.

For a detailed discussion, see Chap. 4 in this volume.

Luo Huiming, investors exercising participatory and to know rights, Securities Forum, 2015, 2, 168.

Measures for the Administration of Securities Investor Protection Fund (2016) Supplementary Provisions on Issues concerning Further Improving the Contributions of Securities Companies to the Securities Investor Protection Fund (2013). In 2007, the CSRC implemented Measures for Payments to Securities Investor Protection Fund by Securities Companies (Pilot), under which securities companies contribute to the Fund ranging from 0.5% to 5% of their annual profit. The percentage a securities company is required to contribute to the fund is dependent on its ranking. As the securities companies are ranked into ten classes, AAA, AA, A, BBB, BB, B, CCC, CC, C, and D, they respectively contribute to the Fund 0.5%, 0.75%, 1%, 1.5%, 1.75%, 2%, 2.5%, 2.75%, 3%, and 3.5% of their profit.

Su Dandan, Yu Ning, Securities Protection Fund Self-reliant, Caijing, 2006, 6.

Chen Hong, Establishment of Chinese Securities Investors Protection Fund, Law Studies, 2005, 7, 112.

Accordingly, 90% of the amount of loss between RMB 100,000 and RMB 200,000; 80% of the amount between RMB 200,000 and RMB 500,000; 70% of the amount between RMB 500,000 and RMB 1 million; 60% of the amount between RMB 1 million and RMB 2 million; and 50% of the amount between RMB 2 million and RMB 3 million.

Li Siqi, Reflections on the System of Protection of Securities Investors in China, Modern Law Science, 2008, 1, 157.

Yue Bing, Civil Remedies for Security Frauds, Journal of Henan Administrative Institute of Politics, 2016, 1, 102.

Jiang Yang, CSRC Vic- Chairman, Speech at People’s Finance Annual Conference 2015, 24/01/2015, http://​www.​csrc.​gov.​cn/​pub/​newsite/​zjhxwfb/​xwdd/​201501/​t20150124_​267107.​html accessed on 4/05/2017.

CSRC, Wan Fu Shen Ke: Compensation First Policy, Investor Protection, 2015, http://​www.​csrc.​gov.​cn/​pub/​newsite/​tzzbh1/​tbtzzjy/​tbfxff/​201508/​t20150803_​282336.​html accessed on 14/03/2016.

CSRC, Xin Tai Dian Qi, http://​www.​csrc.​gov.​cn/​pub/​newsite/​zjhxwfb/​xwdd/​201606/​t20160617_​298998.​html accessed on 4/05/2017.

CSRC, Hai Lian Xun, http://​www.​csrc.​gov.​cn/​pub/​newsite/​zjhxwfb/​xwdd/​201411/​t20141106_​263048.​html accessed on 4/05/2017.

Yue Bing, Civil Remedies for Security Frauds, Journal of Henan Administrative Institute of Politics, 2016, 1, 102.

Huang Tao, He Weiping, Why the judiciary is not important? At the University of Chicago and Shanghai Jiao Tong University Securities Law Forum, Shanghai, 23/6/2015.

For a detailed discussion, see Chap. 3 in this volume.

CSRC Annual report 2007.

They affect asset allocation and asset prices. How Demographics Affect Asset Prices, Credit Suisse, 2012, https://​doc.​research-and-analytics.​csfb.​com/​docView?​language=​ENG&​source=​ulg&​format=​PDF&​document_​id=​946215251&​serialid=​jQpgCRBd%2FS1%2BAajHhl5pC2S8Ct​Q0B6JVzDSusM59pK​4%3D accessed on 10/03/2017.

Miguel A. Ferreiraa, Pedro Matosb, The colors of investors’ money: The role of institutional investors around the world, Journal of Financial Economics, Volume 88, Issue 3, June 2008, Pages 499–533.

Jeffrey G. MacIntosh, The Role of Institutional and Retail Investors in Canadian Capital Markets, 31 Osgoode Hall L. J. (1993).

CSRC vice-chairman, Liu Xinhua, 10th China Finance and Development Forum, 02/09/2009 Beijing.

Brad M. Barber, Terrance Odean, All That Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors, The Review of financial studies. (2008) 21 (2): 785–818.

Jennifer G. Hill, ‘Then and Now: Professor Berle and the Unpredictable Shareholder’ (2010) 33(4) Seattle University Law Review.

Brad M. Barber, Terrance Odean, and Ning Zhu, Do Retail Trades Move Markets? Rev. Financ Stud (2009) 22 (1): 151–186.

Robert C., May 2014, Curbing Short-Termism in Corporate America: Focus on Executive Compensation, https://​www.​brookings.​edu/​wp-content/​uploads/​2016/​06/​Brookings_​ShortTermismfina​l_​may2014.​pdf accessed on 17/02/2017.

Norman Chan, ‘How Can China’s Financial Markets Mature into Reliable Investment Vehicles’ (Speech delivered at the China Business Summit, Beijing, 22/04/2016).

Douglas J. Elliott and Kai Yan, The Chinese Financial System An Introduction and Overview, John L. Thornton China Center at Brookings (July 2013) 4.

Douglas J. Elliott and Kai Yan, The Chinese Financial System An Introduction and Overview, John L. Thornton China Center at Brookings (July 2013) 5.

Jiao Jinhong, Lou Jiahang, Peking University Law Journal, Private Placement of Securities in China, 2002, 4, 485.

CSRC, CSRC News Conference on 29/01/2016, http://​www.​csrc.​gov.​cn/​pub/​newsite/​zjhxwfb/​xwfbh/​201601/​t20160129_​290469.​html accessed on 24/02/2016.

67% of market capitalization in the US public equities market in 2010 was managed by institutions. Luis A. Aguilar, ‘Institutional Investors: Power and Responsibility’ (Speech delivered at the Institutional Investors: Control, Liquidity and Systemic Risks, Atlanta, GA, 19/04/2016) <https://​www.​sec.​gov/​News/​Speech/​Detail/​Speech/​1365171515808> at 20/10/2016.

Fidelity International, Investing in demographics Identifying structural growth winners underpinned by demographic megatrends, 3, http://​www.​fidelity.​com.​au/​linkservid/​DC7A59D9-B416-96D1-179B4A983755E32E​/​showMeta/​0/​ accessed on 10/03/2017.

Cai Yi, Yu Zhongbo, Institutional investors participating in Corporate governance of listed companies, Financial Forum, 2015, 1, 74.

Cai Yi, Yu Zhongbo, Suggestions on Institutional Investors Participating in Corporate Governance of Listed Companies, Financial Law Forum, 1, 2015, 74.

Revealed by one of the interviewees in October 2014. See Chap. 1, Sec. 1.6. for a discussion of the content and protocol for the conduct of these interviews.

OECD, Promoting longer-term investment by institutional investors: selected issues and policies, http://​www.​oecd.​org/​finance/​private-pensions/​48281131.​pdf accessed on 17/02/2017.

Wu Xiaoqiu, Speech at CCTV Financial Forum 11/12/2016.

Wang Jiangyu, Company law in China, Edward Elgar, 2015, 296.

CSRC, Dividend Policy, http://​www.​csrc.​gov.​cn/​pub/​newsite/​zjhxwfb/​xwdd/​200808/​t20080822_​68625.​html accessed on 1/05/2017.

Decisions on Amending Some Provisions on Cash Dividends by Listed Companies 2008.

Further Implementing Cash Dividend Distribution by Listed Companies 2012.

CSRC, China Securities investors Survey Report (2011).

For a detailed discussion, see Chap. 1 in this volume.

CSRC, Annual report 2009, 23.

President Hu Jintao Reports on Chinese Communist Party’s 17th National Congress, http://​news.​xinhuanet.​com/​newscenter/​2007-10/​24/​content_​6938568.​htm accessed on 27/01/2017.

CSRC, Annual report 2009, 26.

Liu Shiyu, Speech at Shenzhen Stock Exchange Member Conference, 15/04/2017.

CSRC, Suggestions on Using the Capital Markets to Assist Implementation of Poverty Reduction Initiatives, http://​www.​csrc.​gov.​cn/​pub/​newsite/​zjhxwfb/​xwdd/​201609/​t20160909_​303220.​html accessed on 9/01/2017. There are 592 villages identified by the State Council Leading Group Office of Poverty Alleviation and Development as poor villages or counties. They are scattered throughout provinces in mid- or western China. The list can be seen in detail at http://​www.​cpad.​gov.​cn/​col/​col282/​index.​html accessed on 10/01/2017.

CSRC, Suggestions on Using the Capital Markets to Assist Implementation of Poverty Reduction Initiatives http://​www.​csrc.​gov.​cn/​pub/​newsite/​zjhxwfb/​xwdd/​201609/​t20160909_​303220.​html accessed on 9/01/2017.

This was confirmed by several interviewees.

Xie Baisan, Captial markets and Poverty Reduction Initiatives, 15/09/2016 see http://​xiebs.​blog.​hexun.​com/​108134740_​d.​html accessed on 17/04/2017.

Shanghai Stock Exchange, Daily Stock Index, http://​www.​sse.​com.​cn/​market/​stockdata/​overview/​day/​ accessed on 17/04/2017.

Tibet Gaozheng Minbao IPO prospectus (submitted on 21/12/2015), http://​www.​csrc.​gov.​cn/​pub/​zjhpublic/​G00306202/​201601/​t20160108_​289650.​htm accessed on 9/01/2017.

Shenzhen Stock Exchange, Yiming Yiyao, and Gaozheng Minbao Listed on Shenzhen Stock Exchange, http://​www.​szse.​cn/​main/​sme/​sczy/​bsdt_​front/​39762653.​shtml accessed on 17/04/2017.

CSRC, News Briefing on 10/02/2017, http://​www.​csrc.​gov.​cn/​pub/​newsite/​zjhxwfb/​xwfbh/​201702/​t20170210_​310584.​html accessed on 17/04/2017.

Liu Shiyu, Speech at Shenzhen Stock Exchange Member Conference at 15/04/2017.

I wish to thank Professor Brett Inder, Monash University, for his valuable assistance in data analysis in this chapter.