Journal of Business Ethics

, Volume 90, Issue 4, pp 561–576

Fraud, Enforcement Action, and the Role of Corporate Governance: Evidence from China


DOI: 10.1007/s10551-009-0061-9

Cite this article as:
Jia, C., Ding, S., Li, Y. et al. J Bus Ethics (2009) 90: 561. doi:10.1007/s10551-009-0061-9


We examine enforcement action in China’s emerging markets by focusing on (1) the agents that impose this action and (2) the role played by supervisory boards. Using newly available databases, we find that supervisory boards play an active role when Chinese listed companies face enforcement action. Listed firms with larger supervisory boards are more likely to have more severe sanctions imposed upon them by the China Security Regulatory Commission, and listed companies that face more severe enforcement actions have more supervisory board meetings. Our findings are of interest, as supervisory boards in China are generally perceived to be dysfunctional. This study contributes to the existing literature in three ways. First, we shed light on the effects of supervisory boards whose role in a fraud setting has not yet been examined. Second, the study has important policy implications for governance reform. Finally, our analyses provide the most up-to-date picture of fraud and governance issues in China’s ever-growing markets.

Key words

corporate governance enforcement fraud supervisory boards 

Copyright information

© Springer Science+Business Media B.V. 2009

Authors and Affiliations

  • Chunxin Jia
    • 1
  • Shujun Ding
    • 2
  • Yuanshun Li
    • 3
  • Zhenyu Wu
    • 4
  1. 1.Peking UniversityBeijingChina
  2. 2.York UniversityTorontoCanada
  3. 3.Ryerson UniversityTorontoCanada
  4. 4.University of SaskatchewanSaskatoonCanada