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Frontiers of Economics in China

ISSN 1673-3444

ISSN 1673-3568(Online)

CN 11-5744/F

Front Econ Chin    2008, Vol. 3 Issue (4) : 560-584     DOI: 10.1007/s11459-008-0028-2
research-article |
Law environment, government regulation and implicit contract: Empirical evidence from the scandals of China’s listed companies
CHEN Donghua , ZHANG Tiesheng , LI Xiang
Accounting Department, School of Business, Nanjing University, Nanjing 210093, China
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In China’s transitional economy, government regulation could be a substitute for the lack of law mechanism and regulator’s power could spill over into other areas not regulated. Then, theoretically it could construct implicit contracts. For example, China Securities Regulatory Commission (CSRC) has the rights to choose initial public offering(IPO) firms among applicants. It might construct implicit contracts between CSRC and local governments if the former consider the frequency and the severity of the scandals among different areas. Local governments could make decisions on whether and how much to implement the implicit contracts.

Keywords law environment      government regulation      implicit contract      corporate scandal     
Corresponding Authors: CHEN Donghua,   
Issue Date: 05 December 2008
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