Andrews, Neil (2004) When the CEO vanished in Spin: Information Disclosure, Corporate Governance and the Bank of China (Hong Kong) Holdings Ltd. Australian Journal of Corporate Law, 17 (1). pp. 71-96. ISSN 1037-4124

Abstract

Transparency underlies WTO models of trade and market models of corporate governance. The disclosure of information produced by listing is claimed to be necessary so Chinese state owned banks can compete with foreign banks, meeting China’s WTO obligations. Events in the Bank of China (Hong Kong) Holdings Ltd (BOCHK) in 2003 show that information disclosure to share markets is an imperfect way to efficiently manage corporate capital. The sudden removal from Hong Kong to Beijing of the BOCHK’s CEO and the non-disclosure of information about it reveals its weaknesses. Disclosure focused on media, rather than regulatory, requirements. The opacity formed by the coincidence of state power and ownership in mainland China and the jurisdictional boundary with Hong Kong was increased in Hong Kong by the investor relations professionals. Information came to be manipulated by the bank’s investor relations advisers. The ostensible openness of the bank was used by regulators to justify further inaction. Rather than increasing transparency the BOC(HK) experience suggests that the economic and political power of Chinese companies, and their state shareholders, may lead to less transparency outside mainland China.

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