Foreign Political Interference in the Governance of Listed Companies : A Market and Behavioral Analysis

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Pages (from-to)301-349
Number of pages49
Journal / PublicationDuke Journal of Comparative and International Law
Issue number2
Publication statusPublished - 28 Jun 2021


This article examines how a company’s stakeholders and regulators can and should respond to external political interference from a foreign government. As various business interests are vulnerable to external political interference, how companies respond to pressure can be determined by the interactions among the market forces created by different stakeholders. Regulators in the host market should devise regulatory strategies if they consider foreign and external political interference to be harmful. In this article, the “Party building” political movement in China is used to illustrate how “China-concept” companies listed in Hong Kong react to political interference from the China Communist Party. It shows that fewer than a third of the companies examined were early adopters of Party building at the end of 2018. This suggests that managers of China-concept companies have not been particularly willing to accept political interference, especially when they are registered outside of China. Companies that have adopted “Party building” have generally accepted some organizational interference or managerial interference, but they have been less accommodating when Party building has been accompanied by more direct control over personnel or human resources decisions. Thus, companies may be amenable to some indirect political interference, but they clearly do not welcome more direct interference. Considering these factors, this article suggests that host market regulators can adopt a more market-based approach by improving transparency and empowering shareholders, instead of implementing more drastic interventions such as mandatory delisting.

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