Dr Yu-Hsin Lauren LIN’s Paper with Prof Curtis MILHAUPT Featured in Stanford Lawyer

Dr Yu-Hsin Lauren LIN’s paper with Prof Curtis MILHAUPT, the William F. Baxter-Visa International Professor of Law at Stanford Law School, was featured in “Responding to China’s State Capitalism” in the latest issue of Stanford Lawyer, a Stanford Law magazine.

The title of the featured paper is “Party Building or Noisy Signaling? The Contours of Political Conformity in Chinese Corporate Governance”, which is published in The Journal of Legal Studies, Volume 50, Number 1 (2021). In Dr Lin and Prof Milhaupt’s study, they examined responses by Chinese firms to a “party-building” policy launched by the Chinese Communist Party (CCP) in 2015 to reform China’s state-owned enterprises (SOEs). They uncover evidence indicating that, from 2015–18, some 90 per cent of publicly traded Chinese SOEs and almost six per cent of privately-owned enterprises have amended their articles of incorporation to give the Chinese Communist Party formal status in their operations. Some of the adopted measures are purely symbolic, but others highly substantive. Dr Lin and Prof Milhaupt, for example, found that 75 per cent of the SOEs require their board of directors to consult with an internal Communist Party committee before making a major business decision. Sixty-six percent allow the committee to nominate directors and senior managers.

Their findings have important US policy implications. The draft Securities and Exchange Commission regulations implementing a newly-enacted federal law—Holding Foreign Companies Accountable Act—require foreign companies to disclose their relationship with the foreign government or ruling party. This Spring, Dr Lin and Prof Milhaupt submitted a public comment pointing out the insufficiencies of the current rules and suggesting appropriate changes in accordance with their findings.

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