Research On Regulatory Policy Efficiency Based On The Corporate Internal Governance

In recent years, since developed countries had exposed to a series of governance scandals, they had intensified supervision for governance failures of listed firms, such as the Sarbanes-Oxley Act published in 2002 in United States. In fact, in some developing countries like China, the governance failures are more common. The large shareholders undertake "tunnelling" to expropriate resources of listed firms. Therefore, governance regulation arose as an important issue for protecting the interests of investors and promoting the sustainable development of stock market both at theoretical and practical level.In recent years, China has continuously standardized stock market, but regulations of corporate governance are not effective. The reason for that lies in lack of consciousness of the goals and targets for reducing governance failures. According to regulatory economic theory, the vital part of improving regulatory efficiency depends on the supervision with market reaction from investors instead of solely supervision. In previous studies, traditional research had focused more on internal governance mechanism rather than the efficiency of external regulations, and consequently separated the possible relationship between them. Additionally, the thesis also introduces the view of property rights and institutional economy, which indicates that arrangements of property rights (as internal governance) and institutional environment (as regulation system) has interchangeable roles in determining economic behaviours. Based on this concept, this paper evaluates internal governance situations and external regulatory policy reaction in stock market in China, emphasizes the investor protection targets on corporate governance, tests how internal governance affect regulatory policy efficiency.In this paper, the sparkling innovative points can be drawn as following:First, based upon the studies of property rights and institutional economy, the paper concentrates on the logic basis of interdependent effects between public governance and corporate governance from the perspective of investors'market reaction. Second, proceeding from china's actual condition, the paper takes a typical example of large shareholders'expropriation and builds expropriation behaviour index for examining the essence and consequences of expropriation behaviours. Meanwhile, the dynamic control factors are introduced to test the confinement effects of governance. Third, in special policy-oriented market in China, the sample has been chosen for general listed firms. The paper tests the efficiency for issues of regulatory terms from perspective of investors'market reaction and then examines whether corporate internal governance has influenced external regulatory efficiency. Fourth, taking the negative examples from the punished listed firms, the paper further tests penalties efficiency from the point view of investors'market reaction, explores inherent correlation between internal governance mechanisms and external regulatory efficiency. This research has uniqueness and innovation both for theories and technical methods, which provides an important theoretical basis for establishing Chinese-special governance and regulatory system. In short, this paper has practical significance.