Institutional Changes Of Enforcement In China Securities Market And Empirical Studies

Investor protection is the primary objective of security regulations. Stricter enforcement of security regulations has become a consensus of many countries as well as China. Due to the specific nature of security regulation enforcement, there are few studies in this area either in China or overseas. Even fewer are the systematic studies on the reform, international comparison, and effectiveness of security regulation enforcement. As a frontline enforcement agent, I have first-hand experiences with the reform of Chinese security regulation enforcement, the difficulties of enforcement, and improved effectiveness of enforcement. Thus, I examine these issues in this paper to fill in the gap in the literature as well as to prove guidance to enforcement practices.This paper tests the following hypotheses. First, security regulation enforcement increases market efficiency. Second, the reforms of regulations effectively increase the efficiency of enforcement. Third, the model of mandatory reforms improves the efficiency of enforcement in China. I find empirical evidence for these hypotheses.My primary contribution is the research angle. First, I analyze the effectiveness of regulation reforms on enforcement efficacy by examining the mandatory regulation reforms. Second, I focus on the practice of enforcement and examine special features of the major security law violations in China rather than following the conventional research methodology. I have two methodology innovations. First, I borrow legal transplant and inheritance methodology from the law literature to compare the enforcement systems across countries. Second, in the empirical studies of violations, I use case studies to examine the violation characteristics of different time period and focus on the interaction between legislation and violation, in addition to the conventional event study methodology.The rest of the paper is organized as follows. Chapterâ… reviews the theoretic background of this researching, including economics, legal, and financial theories as well as theory of regulation evolution. Chapterâ…¡examines the characteristics of regulation enforcement and compares it to market self-regulation and legal recourse. Chapterâ…¢studies the Chinese system of regulation enforcement and its evolution. Chapterâ…£compares the Chinese system to those of other countries. Chapterâ…¤conducts empirical and case studies on the four major types of security law violations. Chapterâ…¥examines empirically the efficacy of enforcement in China. Some policy implications are also discussed. Finally, I discuss the current financial crisis and the role of security regulation enforcement in this crisis as well as the future positioning and development of security regulation enforcement.