Hostname: page-component-78c5997874-4rdpn Total loading time: 0 Render date: 2024-11-10T15:40:31.126Z Has data issue: false hasContentIssue false
  • English
  • Français

Rethinking the Relevance or Irrelevance of Directors’ Duties in China: The Intersection between Culture and Laws

Published online by Cambridge University Press:  28 January 2014

Raymond Siu Yeung CHAN ,
Daniel HO  and
Angus YOUNG
Raymond Siu Yeung CHAN
Affiliation:
School of Business, Hong Kong Baptist University, Kowloon Tong, Kowloon, Hong Kong, China
Daniel HO
Affiliation:
School of Business, Hong Kong Baptist University, Kowloon Tong, Kowloon, Hong Kong, China
Angus YOUNG
Affiliation:
School of Business, Hang Seng Management College, Hang Shin Link, Siu Lek Yuen, Shatin, New Territories, Hong Kong, China; School of International Law, Southwest University of Political Science & Law, Chongqing, China
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper investigates how culture affects people’s attitudes towards directors’ duties in the People’s Republic of China by surveying a sample of Chinese business executives. If cultural practices lead people to behave differently from what the law prescribes, it is a serious regulatory oversight. Our results suggest that Chinese cultural values do matter when it comes to the perception of breaches of directors’ duties. Specifically, we find that respondents who identify with moral-discipline related traditional Chinese values are more lenient to the chairman breaching his director's duties, whereas respondents who subscribe to modern Chinese values are less receptive to the director failing to report the chairman’s contravention of his director’s duties. These results suggest that it is imperative for China’s law-makers to rethink their approach to regulating directors’ duties instead of the wholesale transplantation of laws from Western countries.

Keywords

directors’ dutiescultureChinacorporate lawcorporate governancelegal transplant
Type
Legal Profession and Social Change in East Asian Countries
Information
Asian Journal of Law and Society , Volume 1 , Issue 1 , May 2014 , pp. 183 - 203
Copyright
Copyright © Cambridge University Press and KoGuan Law School, Shanghai Jiao Tong University 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

We would like to thank the Hong Kong General Research Fund for the grant to undertake this research (Project Reference GRF 242309). We would also like to acknowledge research support from Cynthia Ho.

References

Alexander, C.S., & Becker, H.J. (1978) “The Use of Vignettes in Survey Research.” 42 Public Opinion Quarterly 93–104.CrossRefGoogle Scholar
Andreoli, N., & Lefkowitz, J. (2009) “Individual and Organizational Antecedents of Misconduct in Organizations.” 85 Journal of Business Ethics 309–332.Google Scholar
Bebchuk, L.A., & Roe, M.J. (1999) “A Theory of Path Dependence in Corporate Ownership and Governance.” 52 Stanford Law Review 127–170.CrossRefGoogle Scholar
Brand, V., & Slater, A. (2003) “Using a Qualitative Approach to Gain Insights into the Business Ethics Experiences of Australian Managers in China.” 45 Journal of Business Ethics 167–182.CrossRefGoogle Scholar
Carney, R.W., & Child, T.B. (2013) “Changes to the Ownership and Control of East Asian Corporations Between 1996 and 2008: The Primacy of Politics.” 107 Journal of Financial Economics 494–513.Google Scholar
Cavanagh, G.F., & Fritzsche, D.J. (1985) “Using Vignettes in Business Ethics Research.” 7 Research in Corporate Social Performance and Policy 279–293.Google Scholar
Chan, S.Y., & Alex Lau, K.L. (2003) “Directors’ Attitudes and Corporate Governance Effectiveness in Hong Kong.” 9 Asia Pacific Business Review 85–104.CrossRefGoogle Scholar
Chinese Culture Connection (CCC) (1987) “Chinese Values and the Search for Culture-free Dimensions of Culture.” 18 Journal of Cross-cultural Psychology 143–164.Google Scholar
Cotterrell, R. (2006) Law, Culture and Society: Legal Ideas in the Mirror of Social Theory, Aldershot: Ashgate Publishing.Google Scholar
Eberle, E.J. (2011) “The Methodology of Comparative Law.” 16 Roger Williams University Law Review 51–72.Google Scholar
Fan, Y. (2002) “Guanxi’s Consequences: Personal Gains at Social Cost.” 38 Journal of Business Ethics 371–380.Google Scholar
Ferrell, O.C., Zey-Ferrell, M., & Krugman, D. (1983) “A Comparison of Predictors of Ethical and Unethical Behaviour among Corporate and Agency Advertising Managers.” 38 Journal of Macro Marketing 19–27.Google Scholar
Folberg, J., & Taylor, A. (1984) Mediation: A Comprehensive Guide to Resolving Conflicts Without Litigation, San Francisco: Jossey-Bass.Google Scholar
Fu, W., & Deshpande, S.P. (2012) “Factors Impacting Ethical Behavior in a Chinese State-owned Steel Company.” 105 Journal of Business Ethics 231–237.Google Scholar
Hansmann, H., & Kraakman, R. (2001) “The End of History for Corporate Law.” 89 Georgetown Law Journal 439–468.Google Scholar
Hilmer, S.E. (2009) Mediation in the People’s Republic of China and Hong Kong (SAR), Utrecht: Eleven International Publishing.Google Scholar
Ho, C., & Redfern, K.A. (2010) “Consideration of the Role of Guanxi in the Ethical Judgments of Chinese Managers.” 96 Journal of Business Ethics 207–221.Google Scholar
Ho, C., Redfern, K.A., & Crawford, J. (2006) “The Relationship Between Individual Values and Ethical Judgments of Guanxi Practices Amongst Hong Kong Managers.” Paper presented at the 20th ANZAM Conference, Yeppoon, Australia, 6–9 December 2006.Google Scholar
Hofstede, G. (1980) Culture’s Consequences: International Differences in Work-related Values, Newbury Park, CA: Sage.Google Scholar
Hopt, K.J. (2011) “Comparative Corporate Governance: The State of the Art and International Regulation.” 59 American Journal of Comparative Law 1–72.Google Scholar
Jones, C., & Aronson, E. (1973) “Attribution of Fault to a Rape Victim as a Function of Respectability of the Victim.” 26 Journal of Personality and Social Psychology 415–419.Google Scholar
Jones, G. (2012) Corporate Governance and Compliance in Hong Kong, Hong Kong: LexisNexis.Google Scholar
Jones, G.E. (2009) “Differences in the Perceptions of Unethical Workplace Behaviors among Chinese and American Business Professionals.” 7 Competition Forum 473–480.Google Scholar
Joseph, J., Berry, K., & Deshpande, S.P. (2009) “Impact of Emotional Intelligence and Other Factors on Perception of Ethical Behavior of Peers.” 89 Journal of Business Ethics 539–546.CrossRefGoogle Scholar
Landy, D., & Aronson, E. (1969) “The Influence of the Character of the Criminal and His Victim on the Decisions of Simulated Jurors.” 5 Journal of Experimental Social Psychology 141–152.Google Scholar
Lau, A., Li, G., & Young, A. (2007) “Corporate Governance in China: The Role of the State and Ideology in Shaping Reforms.” 28 Company Lawyer 204–211.Google Scholar
Legrand, P. (1997) “The Impossibility of ‘Legal Transplants’.” 4 Maastricht Journal of European and Comparative Law 111–124.CrossRefGoogle Scholar
Licht, A.N. (2001) “The Mother of all Path Dependencies: Toward a Cross-cultural Theory of Corporate Governance Systems.” 26 Delaware Journal of Corporate Law 147–205.Google Scholar
Majid, A., Low, C.K., & Arjunan, K. (1998) “Company Directors’ Perceptions of Their Responsibilities and Duties: A Hong Kong Survey.” 28 Hong Kong Law Journal 60–82.Google Scholar
Markovits, I. (2004) “Exporting Law Reform—But Will it Travel?” 37 Cornell International Law Journal 95–114.Google Scholar
Matthews, B.M. (2000) “The Chinese Value Survey: An Interpretation of Value Scales and Consideration of Some Preliminary Results.” 1 International Education Journal 117–126.Google Scholar
McDonald, G. (2000) “Cross-cultural Methodological Issues in Ethical Research.” 27 Journal of Business Ethics 89–104.Google Scholar
McDonald, G., & Pak, P.C. (1996) “Ethical Acculturation of Expatriate Managers in a Cross-cultural Context.” 3 Cross Cultural Management: An International Journal 9–25.Google Scholar
McDonald, G.M., & Zepp, R.A. (1988) “Ethical Perceptions of Hong Kong Chinese Business Managers.” 7 Journal of Business Ethics 835–845.Google Scholar
McGlynn, R.P., Megas, J.C., & Bensen, D.H. (1976) “Sex and Race as Factors Affecting the Attribution of Insanity in a Murder Trial.” 93 Journal of Psychology 93–99.CrossRefGoogle Scholar
McIntyre, B.T., & Zhang, W. (2003) “Western Mass Media Exposure and Chinese Cultural Values: The Case of Hong Kong.” Paper presented at the Second Hawaii International Conference on Social Sciences, 12–15 June 2003, Honolulu, HI, USA.Google Scholar
McSweeney, B. (2002) “Hofstede’s Model of National Cultural Differences and Their Consequences: A Triumph of Faith––a Failure of Analysis.” 55 Human Relations 89–118.Google Scholar
Minkow, M., & Hofstede, G. (2012) “Hofstede’s Fifth Dimension: New Evidence from the World Values Survey.” 43 Journal of Cross-Cultural Psychology 3–14.Google Scholar
O’Fallon, M.J., & Butterfield, K.D. (2005) “A Review of the Empirical Ethical Decision-making Literature: 1996–2003.” 69 Journal of Business Ethics 375–413.Google Scholar
Peerenboom, R. (2002) China’s Long March Toward Rule of Law, Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Perrins, R., & Jeffrey, A. (1970) Ranking & Spicer’s Company Law, 11th edn, London: HFL Publishers Ltd.Google Scholar
Potter, P.B. (2001) The Chinese Legal System: Globalization and Local Legal Culture, London: Routledge.Google Scholar
Potter, P.B. (2002) “Guanxi and the PRC Legal System: From Contradiction to Complementarity,” in T. Gold, D. Guthrie, & D. Wank, eds. Social Connections in China: Institutions, Culture and the Changing Nature of Guanxi, Cambridge: Cambridge University Press, 179–195.Google Scholar
Randall, D., & Gibson, A. (1990) “Methodology in Business Ethics Research: A Review and Critical Assessment.” 9 Journal of Business Ethics 457–471.Google Scholar
Redfern, K. (2002) “Industrialisation and the Evolution of Managerial Values Across Three Regions in the People’s Republic of China.” Paper presented at the British Academy of Management Annual Conference, London, UK, 14–16 November 2002.Google Scholar
Redfern, K., & Crawford, J. (2004) “An Empirical Investigation of the Influence of Modernization on the Moral Judgments of Managers in the People’s Republic of China.” 11 Cross Cultural Management 48–61.Google Scholar
Redfern, K., & Crawford, J. (2010) “Regional Differences in Business Ethics in the People’s Republic of China: A Multi-dimensional Approach to the Effects of Modernization.” 27 Asia Pacific Journal of Management 215–235.CrossRefGoogle Scholar
Roche, J. (2005) Corporate Governance in Asia, London: Routledge.Google Scholar
Scott, J., & Marshall, G. (2005) Oxford Dictionary of Sociology, Oxford: Oxford University Press.Google Scholar
Slingerland, E. (2001) “Virtue Ethics, the Analects, and the Problem of Commensurability.” 29 Journal of Religious Ethics 97–125.Google Scholar
Smith, R.E., Keating, J.P., Hester, R.K., & Mitchell, H. (1976) “Role and Justice Considerations in Attribution of Responsibility to a Rape Victim.” 10 Journal of Research in Personality 346–357.CrossRefGoogle Scholar
Su, C., & Littlefield, J.E. (2001) “Entering Guanxi: A Business Ethical Dilemma in Mainland China?” 33 Journal of Business Ethics 199–210.Google Scholar
Tan, D., & Snell, R.S. (2002) “The Third Eye: Exploring Guanxi and Relational Morality in the Workplace.” 41 Journal of Business Ethics 361–384.Google Scholar
Tomasic, R. (2007) Corporate Governance: Challenges for China, Beijing: China Law Press.Google Scholar
Tomasic, R., & Fu, J. (1999) “Company Law in China,” in R. Tomasic, ed.Company Law in East Asia, Aldershot: Ashgate, 135–182.Google Scholar
Tsui, J., & Windsor, C. (2001) “Some Cross-cultural Evidence on Ethical Reasoning.” 31 Journal of Business Ethics 143–150.Google Scholar
Van Hoecke, M., & Warrington, M. (1998) “Legal Cultures, Legal Paradigms and Legal Doctrine: Towards a New Model for Comparative Law.” 47 International and Comparative Law Quarterly 495–536.CrossRefGoogle Scholar
Wong, S., & Lau, E. (2001) “Understanding the Behavior of Hong Kong Chinese Tourists on Group Tour Packages.” 40 Journal of Travel Research 57–67.Google Scholar
Woods, P.R., & Lamond, D.A. (2011) “What Would Confucius Do?—Confucian Ethics and Self-regulation in Management.” 102 Journal of Business Ethics 669–683.CrossRefGoogle Scholar
World Trade Organization (2012) “Trade Policy Review, Report by the Secretariat: China,” 8 May, online: <http://www.wto.org/english/tratop_e/tpr_e/tp364_e.htm> (last accessed 3 July 2013).+(last+accessed+3+July+2013).>Google Scholar
Xu, G., Zhou, T., Zeng, B., & Shi, J. (2013) “Directors’ Duties in China.” 14 European Business Organization Law Review 57–95.Google Scholar
Young, A. (2008) “Rethinking the Fundamental of Corporate Governance: The Relevance of Culture in the Global Age.” 29 Company Lawyer 168–174.Google Scholar
Young, A. (2009) “Conceptualizing a Chinese Corporate Governance Framework: Tensions Between Ideologies, Tradition and Modernity.” 20 International Company and Commercial Law Review 235–244.Google Scholar
Zhang, H., Cone, M.H., Everett, A.M., & Elkin, G. (2011) “Aesthetic Leadership in Chinese Business: A Philosophical Perspective.” 101 Journal of Business Ethics 475–491.CrossRefGoogle Scholar