On Moral Hazard And Its Legal Regulation Of Securities Market In China

Opening and developing the financial market, especially the stock market will play a very important role in the reform of the city economic system and the development of the socialist market economic system. In the past few years, stock market has been developing vigorously in China. However, in its growth there are great hidden instability and risks. And the moral hazard described by this paper is one of the most immediate risks in current stock market.The study of moral hazard began with law thinkers' concern over those insurance frauds against insurance companies. Up till now, however, the moral hazards in stock market turn out to be running rife, which, in turn, make the lawful participants suffer great losses while the moral hazard producers seize much illegal incomes. It undermines the principle of fair competition in the market economy, causing the non-rational allocation of social resources. The moral hazards cause great economic damages to the country as a whole, and bring a certain degree of confusion to the social economic order. Therefore, this thesis analyzes the moral hazards in security market and its related legal regulation, a marginal research subject circumscribes legal and moral issues. Integrated the theories in law and economics, ethics, sociology and other related theories, this thesis makes a rational analysis over the moral hazard issues in the stock market. It investigates the factors that contribute to the formation of the moral hazards in stock market, its forms and prevention countermeasures. Hopefully, this thesis may shed light to the further theoretic study on the topic of the moral hazards in stock market.The author will explore the moral hazards in security market and its related legal regulation from the following 3 parts:PartⅠ: General study on moral hazards and the moral hazards in stock market. It constitutes the foundation of this thesis. To regulate and rule on the moral hazard of the securities markets, we first should make clear its basic principles. In this part of the writing, the author first defines the term "moral hazard", and its connotation. Then, he devotes most spaces to the causes of moral hazards. The author considers and analyzes the operation law of the stock market, then identifies the factors that attribute to the moral hazards in the stock market from its origins. Later, the author finds other two institutional factors from "the government-guided principle" and "the obscure property right system". Finally, the author briefly introduces classification of moral hazards.PartⅡ: This part describes the theoretical foundation of legal regulation of the moral hazard in stock market. First, the author, from the perspective of economics, uses information economics and the efficient capital market hypothesis related theories to support the legal regulation of the moral hazard in stock market with economic theories and to find a starting point and breakthrough for its legal regulation to better perform law's function of prevention and control. Then, the author, from the perspective of legal ideas, pays much attention on explaining two basic concepts of the legal regulation of the securities market's moral hazard, i.e. justice and efficiency.PartⅢ: This part mainly deals with the empirical analysis of legalregulation of the moral hazards in the securities markets. First of all, the author makes an analysis on the current situation of moral hazards from 4 aspects: Portfolio investors, operators of listed companies, securities intermediaries, and the exterior factors of the securities market. Then, based on the above analysis, the author puts forward his idea on constructing a moral hazard laws and regulations system for China's securities market. And he further clarifies the significance, the objective, the focus of the moral hazard laws and regulations system. The author believes that a listed company operators' incentive and restrictive legal mechanisms should be established, the securities disclosing legal system, supervision and regulation of securities market, and the structure of securities' civil liability system should be improved. Only with above measures can we effectively curb the risk of moral hazard. Then, we will witness the securities market developing toward a stable, healthy and rapid direction.