ABSTRACT
China has been one of the few destinations of international capital flow in the developing world. Developing a securities market without introducing a practical monitoring regime in China's current social, economic and cultural environment leaves many regulatory pitfalls, and results in many irregularities in the capital market. Despite the unprecedented challenges, the Chinese government is determined to continue the open door policy and accelerate China's integration into the global economy. China's environment has deteriorated. China has suffered severe air, water and soil pollution since the economic reforms. According to the State Environmental Protection Administration, about 60 percent of China's major rivers are classified as being unsuitable for human contact. A significant amount of discussions on corporate governance single-mindedly focuses on the agency theory and assumes that Chinese managers are rational beings identical to those described in the neoclassical economic theory, without paying sufficient attention to the cultural, social and economic variables.
