New Thinking in Financial Market Regulation: Dismantling the “Split Share Structure” of Chinese Listed Companies

China’s distinctive set of stock market institutions was introduced in 1990. Among the characteristics of China’s stock markets was a strict separation between different categories of investors. Listed companies issued different categories of shares to state shareholders, domestic corporate investors, domestic individual investors, and foreign investors. By 2005, the barriers segmenting China’s stock market had been significantly relaxed. Domestic investors were allowed to purchase shares previously reserved for foreign investors, and approved foreign investors were allowed to purchase shares previously earmarked for domestic individuals. Nevertheless, a crucial barrier remained. An ongoing debate among Chinese academics, investors, and policy makers focused on how to resolve the “split share structure” (guquan fen zhi) in which a minority of shares were tradable while the majority of shares (namely those reserved for domestic corporate and state shareholders) were excluded from the market. The split share structure was blamed for distorting prices and inhibiting development of the stock market. This paper analyzes the policy adopted to address the split share structure. To what extent does this policy change reflect new thinking on the part of China’s market regulators? This paper argues that analysis of policy making in China’s capital markets can help to distinguish between two competing assessments of China’s political economy. One account sees China pursuing a gradualist strategy, slowly but steadily expanding the role of markets. Another account sees China trapped in a semi-marketized and increasingly corrupt development pattern. The implementation of the split share structure reform program provides evidence to support the gradualist account of incremental, but persistent, reform. Mary Comerford Cooper is an assistant professor in political science at the Ohio State University. Her recent research focuses on the politics of financial markets in China and Taiwan. Earlier versions of this paper were presented at the Comparative Politics Research Workshop/ Globalization, Institutions and Economic Security Workshop at Ohio State University in May 2007, and at the annual meeting of the Association for Chinese Political Studies in July 2007. I benefited greatly from the constructive and insightful comments of Bj?rn Alpermann, Melanie Barr, Jean-Marc Blanchard, Sarah Brooks, Joseph Fewsmith, Sujian Guo, Dane Imerman, Ryan Kennedy, Marcus Kurtz, Xiaoyu Pu, James Reilly, Alex Thompson, Daniel Verdier, Jianwei Wang, Alan Wiseman, Bin Yu, and an anonymous reviewer. I am also grateful for Lan Hu’s exceptional research assistance. All remaining flaws are purely my own.     

Self-Awareness and Mental Perception

The purpose of this paper is to clarify Prajñākaragupta’s view of mental perception (mānasapratyak?a), with special emphasis on the relationship between mental perception and self-awareness. Dignāga, in his PS 1.6ab, says: “mental [perception] (mānasa) is [of two kinds:] a cognition of an [external] object and awareness of one’s own mental states such as passion.” According to his commentator Jinendrabuddhi, a cognition of an external object and awareness of an internal object such as passion are here equally called ‘mental perception’ in that neither depends on any of the five external sense organs. Dharmakīrti, on the other hand, considers mental perception to be a cognition which arises after sensory perception, and does not call self-awareness ‘mental perception’. According to Prajñākaragupta, mental perception is the cognition which determines an object as ‘this’ (idam iti jñānam). Unlike Dharmakīrti, he holds that the mental perception follows not only after the sensory perception of an external object, but also after the awareness of an internal object. The self-awareness which Dignāga calls ‘mental perception’ is for Prajñākaragupta the cognition which determines as ‘this’ an internal object, or an object which consists in a cognition; it is to be differentiated from the cognition which cognizes cognition itself, that is, self-awareness in its original sense.     

Enrollment in Mental Health Courts: Voluntariness,Knowingness, and Adjudicative Competence

Mental health courts (MHCs) are rapidly expanding as a form of diversion from jails and prisons for persons with mental illness charged with crimes. Although intended to be voluntary, little is known about this aspect of the courts. We examined perceptions of voluntariness, and levels of knowingness and legal competence among 200 newly enrolled clients of MHCs at two courts. Although most clients claimed to have chosen to enroll, at the same time, most claimed not to have been told the court was voluntary or told of the requirements prior to entering. The majority knew the “basics” of the courts, but fewer knew more nuanced information. A minority also were found to have impairments in legal competence. Implications are discussed.     

The Notion of Consent to Sexual Activity for Persons with Mental Disabilities

This paper seeks to examine the notion of consent to sexual activity as it is applied to situations involving persons with mental disabilities both by both medical professionals and the law. This will be achieved by analysing sexuality and consent through the lens of disability theory and subsequently by including feminist theories on the notion of consent and of sexual activity generally where this serves to assist in coming to a genuine assessment of the nature and existence of consent to sexual activity for persons with mental disabilities. It is concluded that in order to ensure that genuine substantive consent to sexual activity on the part of the persons with mental illnesses is accurately assessed at both a civil and criminal level, a fusion of both feminist and disability theory into such assessments and adjudications is vital.     

Judges as satisficers: a law and economics perspective on judicial liability

If judges are guardians of the law, who is to protect the individual member of society from the occasional corrupt, malicious, or reckless judge? The aim of this paper is to provide an answer to the last part of this question, focusing more heavily on cases of negligently inflicted harm. Departing from Simon’s bounded rationality and influenced by other constructs in behavioral law and economics, we view judges as satisficers who make decisions within real-world constraints, such as imperfect information and uncertainty, cognitive limitations and erroneous information. Judges are limited by the commonly observed barriers to the decision making process. Because their goal is not to optimize but to render opinions that are merely satisfactory, they often act as poor agents of their principals’ interests. In this light, it becomes clearer why judges tend to engage in behavior that is “improper”, especially under the circumstances of the currently overloaded judicial caseloads. We first address the differences in judges’ roles in Anglo-American and Continental legal systems. We then present our simple model for judicial misbehavior based on an understanding of judges as “satisficers”. Next we discuss the particularities of judicial errors and introduce a realistic and viable construct of “inexcusable judicial error”. On this basis we evaluate the impact of various incentive schemes on judicial behavior, focusing on the civil liability of judges. We conclude that civil liability for grave judicial errors is the most adequate remedy.     

Big Investment Fraud and “Yakuza Money” Crime — Two Perspectives of Financial Crime in Japan

Financial crime in Japan takes a major toll on both individual victims and the nation’s economy. This paper focuses on large investment frauds that have occurred from post-war Japan to the present as well as financial crimes that involve racketeers of boryokudans, or organized crime groups, more commonly known as yakuza. Major financial offending by organized crime groups include: yamikin (loan sharks), sokaiya (shareholders who extort corporate funds), jiageya (“land sharks” who frighten tenants into vacating properties), and new forms of yakuza money crime that constitute significant challenges to enforcement. The paper concludes that more comprehensive legislation that applies to all forms of investment fraud is needed in order to stem the tide of white-collar crime in Japanese society.