FLSB-Business ethics and corporate social responsiblities in China and Hong Kong

FLSB-Business ethics and corporate social responsiblities in China and Hong Kong

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105/04/20 1 FLSB-Topic 6- Business ethics and corporate social responsibilities in corporate social responsibilities in Hong Kong and China Hong Kong and China
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Introduction Introduction 105/04/20 2 Company Shareholders Board of directors Majority Minority Majority shareholders AGM: make enquiry EGM: Check against any possible abuse Remove a fraudulent directors by passing a resolution Minority shareholders Removal (if enough votes), have right to say NO to privatization
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Breach of Fiduciary Duty Breach of Fiduciary Duty Act for the best interest of the company Exercise your power for a proper purpose Avoid any conflict of duty and interest BUT! Most of the directors are major shareholder Whether the shareholders can sue the directors personally?
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CG in Hong Kong CG in Hong Kong 105/04/20 System Institutional Theory Independent Judiciary Enforcement agencies ICAC, SFC, HKEx Police Effective government Initiative policy Enact law Culture fit theory Good education and culture value system to inference people
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Background of Corporate Background of Corporate Governance in China Governance in China --A question of bad CG system or a question of individual behavior --In China, we have both the systemic problems and problems of quality of individuals --Main feature: Dominant control of directorship and the shareholdings by PRC government -- CG problems like insider control, fraudulent trading, fraudulent listing, corruption and bribery and other types of market misconduct -- CG solutions: Agency theory and stewardship theory 105/04/20 5
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CG solution: Agency theory CG solution: Agency theory --Both the agents and principals are utility maximizers inherent conflicts --Basic assumption in economics: Selfishness in nature --In China: collectivism individualism --Bribery, corruption and malpractice just the norm --Agency theory: Ways to reduce agency cost through regulation monitor directors direct and to punish them accordingly if they are in breach of the law Not engaged in selective prosecution Sufficient evidence Best interest of the society to prosecute the offenders 105/04/20 6
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Consistency between Agency Consistency between Agency theory and Confucianism theory and Confucianism -- Xunzi , one of the founders of Confucianism: “Human nature is evil and goodness is false” Rules to guide human behavior -- Han Fei , one of the founders of Chinese Legalism the use of coercive law to suppress the bad behavior of human beings law as instrument to consolidate the ruling power rule by law instead of rule of law 105/04/20 7
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Consistency between Agency Consistency between Agency theory and Confucianism theory and Confucianism --Good to hold the criminals responsible for bribery and corruption --But selective prosecution : Rule by law --On the contrary, rule of law upholds the principle of certainty and equality one must apply the law equally to all individuals to give the fullest meaning to the agency theory The PRC government has taken a proactive approach to move towards the rule of law in holding government officials at all levels responsible for their acts of bribery and corruption 105/04/20 8
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