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25 Colum. J. Asian L. 180 (2012)
Lifting the Veil of Words: An Analysis of the Efficacy of Chinese Takeover Laws and the Road to a Harmonious Society

handle is hein.journals/colas25 and id is 187 raw text is: LIFTING THE VEIL OF WORDS:
AN ANALYSIS OF THE EFFICACY OF CHINESE
TAKEOVER LAWS AND THE ROAD TO A
HARMONIOUS SOCIETY
Charlie Xiao-chuan Weng
Abstract
Empirical evidence shows that takeovers are value-maximizing events for
target firm shareholders and promote social efficiency. Takeovers are
commonly thouglt to play a key role in reducing managerial slack in corporate
governance through the replacement of inefficient management. Additionally,
a multitude of economic literature indicates that synergy can result in the
value of a combined firm that exceeds the sum of the values of two individual
firms. But despite the potential for a value-creation event, takeovers rarely
happen in China's capital market. One reason for this phenomenon is that
Chinese takeover laws have a chilling effect on potential corporate raiders. The
pro-state-owned enterprise (SOE) approach of the China Securities Regulatory
Commission (CSRC) further deters potential takeovers. This pro-government
approach comes at the cost of non-SOE shareholders' opportunities for value
maximization.
Nonetheless, since the Chinese government's policy focus has shifted from
protecting state-owned assets to promoting social equity, we can expect the
CSRC's regulatory approach to undergo significant changes as well. And in
accordance with the change in the government's core values, many takeover
provisions need to be amended to facilitate value creation events at both state-
owned and privately-owned firms.
Author
Research Fellow (liff) .), [(oGuan Law School, Shanghai Jiao Tong University;
Visiting Scholar, Yale Law School, 2011-2012. I am deeply appreciative to Joyce
Ng, Yae-Ji (Regina) Park'and other editors' helpful comments and insights. I
would like to thank Professors David Skeel, Jill Fisch, Jacques deLisle, and
Margret Blair for reading an earlier draft of this Article and their invaluable
comments. Also, I am deeply indebted to Dr. Herbert Wolfe and Mrs. Chelsea
Bai for wonderful insights. All errors are mine.

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