Securities Investment Fund Governance: Information Disclosure And Institutional Arrangements

Over the last decade,China's investment funds have undergone a dramatic development in terms of total asset,but their poor governance structure has been heavily criticized by the academics and the financial press. This paper first examines the specific agency problems under the organizational structure of investment funds,combining with the systematical survey of the fund governance regime of some developed countries,aims at providing some new thinking and advices to the reform of the governance regime of China's investment funds. The paper is arranged as follows:Chapter One:Preface The introduction of investment funds to China is of great significance to the country's economic reform and development,Which will specifically enhance the saving-investing mechanism,facilitate the building of modern enterprise regime,advance the social security reform,and prompt the healthy operation of capital market. With a view to the core mechanism of fund governance regime in other countries' legal system and the most fragile points of this country's investment fund system,this paper focus on four areas:the mandatory fund disclosure system,the independent fund directors system,expecting to provide a the fiduciary duty of fund managers,and the internal controls system of fund managing company. This paper mainly use the method of induction and deduction in the course of its analyzing,and attaches much importance to employing many related empirical results in order to avoid the whole research dogmatic.Chapter Two:The Framework Analysis of the Governance of Investment Funds This chapter introduces the theoretical basis and the research focus of the whole paper. Basing on the trust of the ethnical standards and the expert skills of fund managers,fundholders hand over their assets to fund managers,expecting a certain level of risk return. Because of the information asymmetry between fundholders and fund managers,and on the premise of limited rationality and opportunism of each sides,fund managers(agent)'s behavior will in many situations conflicts with the utility of fundholders,thus producing the agency problems under the structure of investment funds. The specific agency problems of investment funds may include:inefficient investing allocation arising from the adverse selection,and self-dealing,expense-shifting,related transactions,unreasonable risks,and herding behavior deriving from the moral hazard of fund managers. The fund governance mechanism needed to control the agency costs incurred mainly contains:market competition,finance mechanism,and the investor protection system. Market competition is proved by many empirical results to be an efficient mechanism to curb the agency costs of investment funds,but its efficiency rests on the presumption that there already exists a sound investor protection law system;The rationale for the finance mechanism approach to corporate governance generally disagrees with the reality of economic fundamentals of many countries. The standpoint this paper adopted is investor protection system on the ground that better investor protection level results in a lower level of asset expropriation technology of fundmanagers. Considering the core elements of fund governance regime of other countries and the most outstanding problems in China's fund governance sector,this paper focus on four fields:the fund information disclosure system,the role of independent fund directors,the fiduciary duty of fund managers,and internal control of fund management company.Chapter Three:The Research on Fund Information Disclosure System The necessity of mandatory disclosure of investment fund lies in:the best disclosure level induced by the voluntary disclosure regime is below the best disclosure level based on the total social utility;there doesn't exist an open and free competing market for pricing the value of open-end investment funds,the efficient market hypothesis can not be applied to supporting the voluntary disclosure mechanism of open-end investment funds;from the point of investor protection,only...