Abstract
Like courts in democratic regimes, courts under authoritarianism play an important role in the regulation of complex economies. In particular, scholars suggest that authoritarian judiciaries are commonly encouraged to provide independent adjudication in the context of economic disputes between firms. Yet because regime insiders are often connected to firms, judges have strong incentives to consider the political implications of their decisions even in areas of the law where they are allegedly more independent. In this article, I propose a new theory about the role of corporations’ political background in commercial lawsuits. Using a data set on the litigation outcomes of firms in China, I find that the composition of a firm’s board membership is a significant predictor of its lawsuit outcomes. A higher percentage of corporate board members with political connections leads to a higher probability of lawsuit success. The results point to the limitations of the selective judicial independence theory.
Introduction
Authoritarian regimes have strong incentives to attract domestic and foreign investments. To do so, they need to promote a sound judicial system, staffed by professional and independent-minded judges. Yet, authoritarians also have incentives to promote the interests of regime insiders, such as particular firms and private individuals, and a judicial system that is aware of these relationships and willing to shape the law so that regime allies are protected is also desirable.
Thus, existing theories of judicial politics under authoritarianism suggest that undemocratic regimes seek to develop judicial systems whose judges are selectively independent. The autocrat wants to establish judicial independence in certain areas to attract foreign investment, to boost economic transactions and growth, to manage social discontent, and to monitor lower level state bureaucrats’ behavior (Moustafa, 2007, 2008; O’Brien et al., 2006; Peerenboom, 2002). Due to such considerations, the ruler would prefer judges to exercise independent judicial discretion and rule cases based on the legal merits of the claims alone. On the contrary, the autocrat wants to maintain a tighter control of the court over cases in the political sphere (Cohen, 2006; X. He, 2012b). These cases involve important regime stakeholders or politically sensitive issues that concern ruling elites’ core interests, and the authoritarian leadership gives clear directives to the judge regarding how to handle this type of cases.
Individual judges are responsible for putting this selective independence regime into practice. Two problems complicate their work, especially in relatively large states. First, large economies generate massive levels of often highly complex litigation. In the case of China, it may not be obvious which of the hundreds of thousands of cases handled each year require special attention and political care. Second, authoritarian regimes are not monolithic. Research has shown that authoritarian regimes can be very fragmented with significant principal-agent problems existing between the central authority and local state functionalities, such as in the case of China (Lieberthal & Lampton, 1992; Mertha, 2009; Tanner & Green, 2007). Chinese courts and judges are more than pawns of power-holders and can strategically exploit the power fragmentation within the party-state to advance institutional and personal interests.
This article extends our understanding of judicial autonomy in single-party authoritarian regimes by examining commercial lawsuits in China. Commercial cases are generally thought of as being less politicized even in countries that lack judicial independence. But I argue that politics still matter in commercial litigation and it is not easy for autocrats to instrumentally manipulate the judiciary to achieve governance goals. Judges still have strong incentives to conform to political signals under certain conditions. This is because of the following two reasons.
First, judges do not always receive clear signals from a single source of political authority. Commercial lawsuits often involve actors with different types and depths of political background. Nominally private entities are sometimes engaged in public–private business partnerships formed through government procurement contracts or public service outsourcing. Many private firms also have state-owned enterprises (SOEs) as minority investors. When a government administrative or regulatory agency is sued by an SOE, it is not clear which political direction the judge should pursue. Which dominant political force(s) dictates the outcome of the case depends on the specific features of the lawsuit, and the judge is not always certain about her ruling’s political ramifications. The judge is often under pressures from multiple political actors and special interests at various levels and branches of the authoritarian regime who have a stake in the lawsuit (Clarke, 2003; Deininger & Jin, 2009; Guo, 2001; Ng & He, 2017).
Second, judges have both an institutional interest of protecting the court’s prestige and personal interests of professional fulfillment. Authoritarian judiciaries need to cultivate a certain level of legal credibility and legitimacy in public eyes (Rajah, 2012; Whiting, 2017). Because the highest court is the last legal defense against arbitrary or biased rulings at lower level courts (Ip, 2010), higher level judges care more about the reputation of the judiciary as an impartial venue for dispute resolution (T. Zhang, 2012). If the top court cannot adequately correct lower courts’ misjudgments, it may undermine popular trust in the legal order and lead to political instability. Therefore, top courts have greater institutional responsibility to ensure that the general public still have some degree of faith in resolving their disputes through institutional channels instead of frequently resorting to extralegal violence or street protests. Judges at higher levels are thus expected to be more impartial in adjudicating cases. In contrast, lower level judges have stronger career advancement incentives to win favor with their political patrons and are thus more easily swayed by political signals. As part of their performance evaluation requirements, judges are incentivized to carry out their judicial duties effectively and efficiently, which requires sufficient support from other government bodies. A judge facing greater resource constraints, which is common at lower level courts, is therefore more attentive to the political needs of other state actors whose cooperation is vital for court functions. In short, judges driven more by self-interested career motivations are more susceptible to litigants’ underlying political power.
These two factor complicate judicial decision-making in authoritarian countries where various stakeholders can exert influence over the judiciary. Multiple power centers exist in a hierarchical bureaucratic structure, which often leads to conflicts of interest and influence. Embedded in such a structure, it is difficult for the judge to always issue a politically waterproof ruling. There can be many hidden sources of political challenges to a judge’s ruling given the scale and complexity of the economy. As a result, judges use simple heuristics to sort out the preferences of relevant stakeholders, to work though massive caseloads without accidentally tripping over political land-mines. Meanwhile, the judge’s attentiveness to political signals is conditional on her institutional and career incentives, including the concern of safeguarding judicial prestige and the professional needs of executing daily adjudicative duties in a politically sound fashion.
In this article, I propose a “political information” theory to explain when, in the realm of commercial lawsuits, authoritarian court judges are able to adjudicate cases independently, and when they are subject to political pressure. I argue that corporate litigants’ political background conveys information to the judge about the regime’s preference. Firms whose board membership information signals greater political endowment are more likely to receive favorable rulings. Moreover, the effect of such political information depends on the judge’s institutional incentives to promote the court’s status and on the judge’s professional dependence on other government branches to execute her duties. Courts at lower administrative levels and courts more dependent on other government bodies to fulfill their obligations are more likely to conform to the political signal. These judges are more willing to err on the side of being overly political and conformist, even when they are given a great degree of judicial discretion in commercial lawsuits. Taking the side of the party with stronger political ties is a less risky bet than adjudicating cases without any regard for the litigants’ political background. Such incentives are weaker for higher level judges who are more concerned with the cases’ legal merits and the court’s prestige.
The article draws evidence from commercial lawsuits filed in Chinese domestic courts. The next section introduces the authoritarian regime’s attempts at promoting selective judicial independence. Then, I propose a political information theory that focuses on how the signal of the party-state’s political preference informs the judge’s eclectic approach in adjudication. Next, I use a newly available data set on the lawsuit information of publicly listed firms in China (Wang, 2016) to empirically test my theory about the relationship between a firm’s political background information and lawsuit outcomes and other theoretical implications. The final part concludes.
Selective Judicial Independence
The Party-Dominated Judicial System
China has a socialist legal system with some elements of civil law traditions (Peerenboom, 2002; Quigley, 1989; Reichel, 2002). As a single-party developmental authoritarian state, China’s judicial system is characterized by both a strong commitment to protecting the party-state’s core interests, and an increasingly significant role as the primary institution for adjudicating social, economic, and political conflicts (Z. Chen, 2003; Liebman, 2007a; Potter, 2005; Wang, 2014).
Under the socialist legal system, the Chinese Communist Party (CCP) plays a dominant role in the judicial processes and the Party’s leadership is considered as “a living constitution” (X. He, 2012b). The primary mechanism of political control over the judiciary is through the Party Central Committee, which instructs the National People’s Congress (NPC) as to whom to elect to the most important posts of the state, such as the presidents of the Supreme People’s Court (SPC) and Supreme People’s Procuratortate. This arrangement is largely replicated at all levels of the state (Nathan et al., 1997). The Political and Legal Affairs Committee (PLAC) under the Party Central Committee overseas the judiciary, the procuratorate, the law enforcement agency, and the legal bureau (a regulatory body for the legal profession). There is no meaningful separation of power or independence for the judicial apparatus to act against the Party. The president and main leaders of the court are appointed by the party committee, requiring only nominal approval by the People’s Congress. The adjudication committee is the highest decision-making body within Chinese courts. It is formally responsible for adjudicating “difficult” and “significant” cases involving mostly matters of national security, death penalty, foreign-related issues, mass incidents, and complex civil cases (Clarke, 1991; Cohen, 1997; X. He, 2012a; Liebman, 2007b). As the most authoritative body in a court whose directions must be followed by judges, the committee is composed of senior Party members, such as the court president and vice presidents, and has no way of resisting the external interference of the Party (W. He, 2012; L. Li, 2012; Liebman, 2017; Woo, 2017).
The Need for Judicial Autonomy
The Party’s control of the judiciary does not suggest that the party-state does not have any incentives to establish judicial autonomy. An impartial and trustworthy judiciary is important to the autocrat because it helps sustain a functional market economy and competitive investment environment. Effective, efficient, and predictable judicial institutions also help attract foreign capital (Jensen, 2008; Q. Li et al., 2018; Wang, 2014). Lubman (1999) and Peerenboom (2002) document the rapid expansion of judicial infrastructure in post-Mao China. Professional courts and other legal institutions have been established as a means of promoting economic development and resolving frictions during economic transitions (Clarke, 2007; Su & He, 2010). The importance of courts in China can also be seen in the sheer size of China’s judicial establishment. The total numbers of adjudicated cases in all Chinese courts rose from 3.3 million in 2014 to 5 million in 2017. 1 China employs the largest number of judges in the world (195,000) and has one of the highest number of judges per capita (Ng & He, 2017). The share of commercial and economic lawsuits and the establishment of judgeships and legal institutions designated specifically for such lawsuits have also been rising rapidly (X. He, 2009; Liang, 2007; Ng & He, 2017).
The party-state realizes that a strong legal system helps address daily governance and socioeconomic development problems. Meanwhile, scholars believe that the scope of judicial reforms and the application of judicial independence, impartiality, and integrity principles are limited to legal disputes in the economic sector (Henderson, 2010). Chinese leaders embrace the economic growth-enhancing effects of rule by law, but not the rule of law reforms that can challenge Communist Party power and authority (Woo & Gallagher, 2011). X. He and Su (2013) find evidence that, except in administrative cases where the defendant is the government, adjudication in Shanghai courts seems to be based on the merits of the case. X. He (2014) also finds that in housing demolition litigation, courts often rule against local authorities to alert the central government about the potential damages of local bureaucrats’ unruly behavior to social stability.
Entrenched regimes with long time horizons for economic development have incentives to maintain a sound legal system to perform certain governance functions (Olson, 1993; Peerenboom, 2009). The former Chief Justice of the SPC expressed this thinking in stating that, the courts, law, and legal system are a means for economic growth, and thus judges need to consider the consequences for development when deciding cases. 2 But the question is, how are judges able to do that exactly? The Party still retains veto power in the appointment and promotion process of a judge; once the judiciary oversteps the line tolerated by the Party, it will be rectified (Peerenboom, 2009). Meanwhile, the ruling party has turned to the courts for disposition of an increasingly wide range of controversial cases. Judges obviously face a dilemma of protecting the interests of regime insiders while safeguarding an ever expanding and diversifying market economy.
Challenges: Embedded Judges and Complex Interests
I argue that it is difficult for autocratic rulers to instrumentally manipulate the court to their benefits. A utilitarian view of the regime’s control over judges overlooks the massive principal-agent problems inherent in a legal system affected by fragmented institutional and personal interests.
Research across different developing economy regimes has shown that judges commonly face the need to accommodate diverse interests and priorities (Gillespie & Chen, 2010; Kapiszewski, 2012; Moustafa, 2007). This is a particularly salient feature of judicial decision-making in a Leninist party-state like China. Ng and He (2017) argue that the institutional environment faced by Chinese judges is characterized by administrative, political, social, and economic embeddedness, and hence the judges must deal with multiple external constraints. Y. Fu and Peerenboom (2009) summarize that interference to the presiding judge of a case may come from: the Communist Party organs, the judiciary itself, the People’s Congress and the People’s Procuratorate, local government and administrative entities, the media and public opinion, and the judge’s own social acquaintances.
A critical operational obstacle faced by Chinese courts, particularly lower level courts in rural areas, is the lack of funding (Peerenboom, 2009; Wang, 2013). When local judiciaries rely on the local government for financial resources, local judges are naturally receptive to local officials’ influence. Before 2008, the budget of each court was determined by the local government and CCP committee at the same administrative level as the court (O’Brien & Li, 2004). In the Chinese political hierarchy, the judiciary traditionally has a lower status than other party-state organs. Local allocation of funds thus renders the court vulnerable to being underfunded, given the local state’s many other governance priorities. In addition, the local government may use a variety of tools to obstruct the enforcement of judgments it does not like and engage in a subtle power struggle with the judiciary (Clarke, 1996; Gong, 2004). The local court, given its weaker bargaining position relative to other power centers, has to avoid offending the local state to secure financial, administrative, and operational support.
Meanwhile, the authoritarian leadership consists of actors with heterogeneous preferences whose actions are not always well coordinated. In commercial disputes, for example, lower level judges may be subject to the local government’s mandate to protect its patronage network and important business partners, which demands preferential regulations and selective law enforcements. However, local bureaucrats who need domestic and foreign investments to boost their economic performance indicators require establishing robust rule of law institutions (Wang, 2014). At the same time, higher level officials may exert pressure on local judges to sanction misconduct by lower levels of government (Ginsburg, 2008; Widner, 2001). Thus, local judges often face the dilemma of weighing some authorities’ directives against those of others. J. Li (2017) emphasizes that explaining judicial behavior in China should look at the triadic distribution of power among the claimant, the respondent, and the court.
It is challenging for the judge to discern the political implications of her ruling when the litigants are enmeshed in a complicated network of political interests and court docket is overcrowded. In 2011 alone, Chinese judges adjudicated more than
The regime interests involved in a lawsuit are not only diverse, but also ambiguous. Chinese judges usually do not receive clear directives from the Communist Party as to how to adjudicate these cases. Stern (2010, 2013) examines local-level environmental disputes and the strategic dilemmas this presents for judges who must navigate inconsistent and ambiguous signals from local and central government. She argues that while Chinese judges typically comply with instructions when political pressure is high, a combination of shifting incentives, legal uncertainties, and political ambiguity also shape the judge’s decision-making. In a system of “rough justice,” judges have to weigh competing political priorities and aim for a compromise. Stern and O’Brien (2012) also point out that Chinese state authorities often send mixed signals about the limits of the permissible in environmental lawsuits filed by environmental activists and nongovernmental organizations (NGOs). Beyond certain well-patrolled “forbidden zones,” the party-state speaks with many voices and the state’s preference is often very ambivalent. In practice, Chinese judges choose to strategically comply with political instructions and craft autonomous space to exercise judicial discretion when the instructions are vague or when they need to reconcile competing political priorities.
The complexity of the adjudication environment implies that judges’ legal rulings have to follow a political logic that underpins the court’s dual roles as both guardian of the party-state’s core interests and facilitator of the market economy.
Corporate Political Information (CPI)
I argue that, embedded in such an overloaded, complex, and high-risk adjudication environment, judges use heuristic shortcuts to sort out the preferences of underlying regime stakeholders in commercial lawsuits to manage the political uncertainty of their rulings.
Board Membership
I propose that corporate litigants’ board membership conveys information to the judge. When a firm’s board of directors is dominated by members with political connections, it signals that regime insiders have strong vested interests in the corporate project. In comparison, if most of the board members only have background in private enterprises, it means that the party-state is not deeply invested in the firm’s development and wellbeing.
Many Chinese companies are nominally owned by private individuals, but the board has reserved seats for people with deep political connections and no controlling stakes in the company. For example, Tencent is an internet company listed in Hong Kong Stock Exchange. Among its eight board members, one is a NPC representative, one is a former executive director of a large SOE, and another one is a National People’s Political Consultative Conference (NPPCC) representative and an independent director of a major state-owned bank. 4 ZTE is a major telecommunications equipment manufacturer listed in Hong Kong and Shenzhen. Its board members include two former senior managers of the China Aerospace Science and Technology Corporation (the main contractor for the Chinese space program), independent directors of state-owned materials engineering, telecommunications, transportation, mining, pharmaceutical, automobile manufacturing companies, and ex-leaders of state-affiliated research institutions. 5
These companies do not have direct state ownership, but they are important pet projects and profiteering tools of the national or local government and receive significant support from the state to become global champions. For instance, ZTE significantly reshaped its board membership to comply with U.S. sanctions against ZTE for its violation of trade restrictions with Iran. But the outgoing board members still retain significant operational control over ZTE through their ownership in state-affiliated entities who invest in ZTE, in spite of the fact that nonstate investors own greater stakes in ZTE than state-affiliated investors (Strumpf et al., 2018).
The structure of board membership conveys information to the judge as to how much regime insiders are invested in the corporate project. For the judge, it is not enough to just recognize that the corporate litigant has significant state ownership or that one of the board members is a high-ranking official. Siding with firms connected to certain types of elites risks angering other political factions or regime allies. To minimize the potential hazards of any ruling decision, the judge takes a comprehensive view of the firm’s board of directors’ background. Regime interests have strong incentives to maintain managerial control over enterprises that bring significant political and economic benefits. For example, among the 13-member board of directors of PetroChina, a major national oil and gas company, 10 board members have previous careers in state-owned energy, oil and gas, shipbuilding, aviation, and petrochemical enterprises or party-state leadership positions that regulate these industries. 6 PetroChina is an important contributor of government tax revenues, employs massive labor force, and plays an important diplomatic role in the government’s geostrategic initiatives (Wu, 2014; Ziegler, 2006). The ruling elites have diverse motives in securing the success of PetroChina, and its board thus is staffed with representatives who can safeguard these stakeholders’ interests. As a result, PetroChina tends to win most lawsuits against other state-affiliated entities along the value chain of oil and gas industry with more singular interests, including state-owned coal companies, oil field operators, local retail distributors, oil-drilling machinery manufacturers, and so on. 7
Information Gathering
Based on the author’s interviews with “front-line” judges who have extensive experience presiding over commercial cases, judges are generally aware of the litigants’ political background. 8 One judge remarked, “Experienced judges have a sharp eye for discerning the political stakes involved in a seemingly trivial case. They are better at reconciling all sorts of conflicting interests and minimizing potential conflicts between parties.” 9
Judges become aware of such political information through a proactive channel and a passive channel. Proactively, the judge searches for information about the litigants’ background. Depending on the complexity of the issue at hand, the judge can either seek more detailed information on the plaintiffs and/or defendants by herself, or ask court clerks and assistants to flag litigants with seemingly significant political capital, so that the judge will not overlook deeply connected players. A judge confided that Do you think judges can adjudicate cases without paying attention to the profiles of the plaintiffs and defendants? I sometimes ask my assistants to compile briefs on the background materials of the litigating parties. But the assistants can be very careless and inexperienced. So I also do some research myself, such as asking my friends and acquaintances, to better understand the litigants’ connections. If you hear a judge telling you that s/he doesn’t care about the litigants’ background, s/he is either lying or being very imprudent.
10
Judges also learn of such information in a passive manner. Judges who are less politically savvy may be contacted by senior officials or intermediaries who give hints as to the stakes at hand. For example, one judge reflects that he once received an anonymous letter with a list of stakeholders of a company whose case is in the judge’s docket. The letter includes the names, titles, and political connections of several major owners of that company. Noticing the significance of the case, the judge brought the case to his supervisor and an adjudication committee was convened. The adjudication committee then conducted their own research on the firm’s political background before reaching a decision. 11 In other cases, the directions are less subtle and may involve direct threats to the judge’s professional career and even personal security. Even for judges who lack the political savvy to actively avoid intruding upon vested interests, they still look for cues that indicate the political embeddedness of the litigants.
An example that demonstrates how the judge obtains political background information is a lawsuit fought between a shipbuilding company and a state-owned bank’s local branch. 12 The bank claims that the ship manufacturer defaulted on 1.6 million RMB (US$231,000) worth of loans from the bank. The judge tried to convince the senior manager of the ship manufacturer to reach a settlement plan that pays back half amount of the loans to the bank instead of engaging in a lengthy legal battle. But the manager informed the judge that the company’s stakeholders include municipal and provincial government enterprises responsible for river-cleaning, trash recycling, river and port management, wastewater treatment, and other public services and utilities provision. The local city government itself also owns a small share of the company. The manager hinted that if the court does not rule in favor of the ship manufacturer, the court might see significant difficulties in having its future cases enforced by local police or other government agencies. The manager also warned that if the company went bankrupt as a result of loan payment, the rivers in the city would not be cleaned up timely and trashes would pile up in many neighborhoods. Eventually, the plaintiff lost the lawsuit and did not recover any losses from the loan. The judge’s reasoning was that, even though the central government owns a majority share of the bank through the State-owned Assets Supervision and Administration Commission, most of its board members are representatives from foreign and private investors without deep ties to central or local administrations. In contrast, the shipbuilding company is much more politically embedded and a wide range of political actors have vested interests in the enterprise’s wellbeing. So the judge concluded that the central leadership would not be very committed to protecting a local branch’s interests in a case like this.
In summary, the political background information of corporate board membership shapes the judge’s decision to accommodate the interests of diverse political stakeholders and coalitions. Judges who are concerned with the political implications of their rulings are more attentive to the CPI.
Heuristic Shortcut
Chinese judges face significant caseloads and time constraints in their daily work (Finder, 2018). They are pressured to resolve disputes as quickly as possible without unduly angering litigants or other actors (Kinkel & Hurst, 2015). Therefore, just like judges in other jurisdictions faced with lengthy dockets and limited courtroom time, Chinese judges use simple heuristics to guide their decision-making.
Research has shown that judges use simple cognitive rules of thumb or heuristic shortcuts to manage the complexities of cases and to maximize their outputs (Bainbridge & Gulati, 2002; Peer & Gamliel, 2013; Sale, 2001). Judges recognize that they do not possess the expertise, experience, or time to fully grasp the issue at hand. To cope with the complexity and uncertainty of the adjudicative environment, judges resort to mental shortcuts (Rachlinski & Wistrich, 2017) such as numerical heuristics. Experimental evidence in psychology indicates that when people have a high cognitive load, their judgment tends to rely less on relevant background knowledge and rely more on numerical anchoring and priming (Blankenship et al., 2008). Also, the less knowledge people have about an object, the more they assimilate their estimation of the object to a previously considered standard (Mussweiler & Strack, 2000). It has been shown that judges commonly use intuitive heuristic tools in judicial decision-making in various types of cases, including civil, commercial, and criminal cases (Enough & Mussweiler, 2001; Guthrie et al., 2007; Rachlinski et al., 2007). I argue that the numerical makeup of board members’ political connections is an efficient and reliable way for judges to pick up the political signal.
Incentives for Judicial Autonomy
Judges are influenced by the signal of CPI. But their ruling decisions still need to, at a minimum, reflect the judiciary’s function as a reliable venue for dispute resolution so that market transactions are protected and sustained. Judges at high level appellate courts have greater responsibilities to faithfully evaluate the legal merits of the disputants’ claims and make the necessary corrections to misjudgments by lower courts. The SPC, as the court of last resort, is the last defense against political pandering by first instance and appellate courts at lower levels. The SPC judges still answer to the top party-state leadership, but they enjoy greater discretion in ensuring that the rulings reflect the legal records to the greatest extent possible (Ip, 2010). The SPC’s efforts to pursue self-empowerment, professionalism, and transparency reflects its own institutional interests of strengthening its sociopolitical status and reputation (Ahl, 2014; Ahl & Sprick, 2018; T. Zhang, 2012). To police and discipline corrupt behavior by state bureaucrats (including the judges), the central government in Beijing also established 1,400 specialized administrative tribunals to provide Chinese citizens with an avenue to contest the decisions of local officials (Peerenboom, 2002).
Other than concerns for safeguarding the court’s prestige and maintaining public confidence in the judicial system, judges also care about obtaining financial and administrative support to execute judicial functions. In underdeveloped regions of China, courts face greater operational obstacles caused by the lack of funding (Henderson, 2010; Peerenboom, 2009; Wang, 2013). The local government can use its budgetary power to interfere with the judge’s adjudication and to obstruct the enforcement of awards it does not like (Clarke, 1996; Gong, 2004). In some areas the judiciary’s fiscal and administrative dependence on other government branches has given rise to judicial “local protectionism” where local courts are expected to support local governance by being “friendly” in judgments involving local government, SOEs, or other local monopoly corporate interests (Huang, 2008; Ng & He, 2017; W. Zheng, 2010). In contrast, courts that are more financially self-sufficient are less deferent to the interests of other party-state bodies (Wang, 2013). Gechlik (2005) finds that judges in Shanghai courts are significantly less prone to judicial corruption because they are better paid than their colleagues in other areas. As mentioned above, before 2008 the budget of each court is determined by the local government in the same locality (Gong, 2004; Q. Zhang, 2003). But the government has since centralized court funding as part if its judicial reform plans (Peerenboom, 2009), and there is reason to believe that local courts will be more independent as a result.
Hypotheses
I argue that Chinese judges are embedded in an intricate web of political and economic interests. To manage the political uncertainty surrounding ruling decisions, judges take the least risky bet and favor litigants whose board members have the strongest political endorsement. Because of the complexity of interests involved in a lawsuit, any measurement of a single dimension of political connectedness between the litigants and the party-state regime is not enough to capture the breadth of political embeddedness of all relevant stakeholders. Therefore, I propose a more comprehensive political information indicator focusing on the board membership to capture the political endowment of corporate litigants, where the corporate litigants can be either plaintiffs or defendants.
Meanwhile, the judge’s urge to conform to political signals is tempered by a simultaneous need to promote the court’s prestige as a neutral venue for adjudicating disputes arising from massive amounts of economic transactions. Courts’ financial constraints and operational dependence on other administrative bodies also affect judges’ sensitivity to CPI.
In summary, I propose the following hypotheses:
The Empirical Strategy
I utilize a new data set on Chinese listed firms’ lawsuits constructed by Wang (2016) to test the hypotheses. It is a manually coded data set of commercial litigation disclosed by Chinese firms that are publicly traded in China’s stock markets. In 1998, the Shanghai and Shenzhen Stock Exchanges started to require all public listed firms to disclose their involvement in litigation (Lu et al., 2015). The data set has 4,275 lawsuit cases collected from company reports, covering a time period from 1994 to 2012. It has information on both case-level characteristics (e.g., issue types, outcomes, amount claimed, court levels) and firm-level variables (e.g., ownership, industry, total assets, profit margins). The lawsuit disclosure requirement is mandatory for all publicly traded firms since 1998, and China’s securities regulator has credible enforcement power against noncompliance (G. Chen et al., 2005). This data set is the most comprehensive source of information available yet on Chinese publicly traded firms’ lawsuits.
Measurement of CPI
The coding scheme follows the convention of the political connections literature (Faccio, 2006) and looks at the career trajectories of the board members of each firm. If a board member has worked in any national or local government branches (executive, judiciary, legislature, and military) or any central and local CCP offices, the board member is coded to have political connection to that party-state agency. For each firm, the data set also counts the total number of board members with any kind of political connections as well as the total number of board members.
I use the proportion of board members who have any type of political connections to measure the level of information that the judge has about the regime’s political preference toward the firm:
I argue that this measure conveys the most comprehensive information about a corporation’s political endowment. Other commonly used indicators of the corporate political connections (national/local CCP or government career, membership in national/local People’s Congress, membership in national/local CCP congress or the PLAC, military career, SOE, etc.) only cover certain aspects of the firm’s political embeddedness. Each dimension could have countervailing influence against each other over the judge’s decision. For example, a judge may learn that a litigating firm’s board members are connected with the national CCP committee which is mostly concerned with social stability and fostering an attractive business environment; the firm’s other board members used to serve in the regional government or the Local People’s Congress who are more invested in advancing their local protégés’ interests. In such a case there is much uncertainty regarding the authoritarian leadership’s preferred approach to adjudication. The issue becomes even more complicated when the opponent litigant also has political connections that express incoherent or inconsistent preferences that the judge finds difficult to reconcile.
Taking the side of the more politically endowed party, the judge is more likely to err on the side of being too political and conformist. This strategy is always a less risky bet for the judge than simply disregarding any political background information of the litigants, as the judgment’s unforeseeable political ramifications may be significant. It is also a more legally eclectic approach than taking cues from just one coterie of political interests within the ruling regime that is consisted of, nevertheless, an ever shifting alliance of interests.
For more complex cases requiring special review by the adjudication committee, litigants’ political information should also influence deliberations among committee members and their final ruling. The inner-workings of the adjudication committee are not transparent and the minutes of their meetings are rarely made public (X. He, 2012a). Therefore, the exact process whereby judges incorporate CPI into decision-making is unknowable. As discussed earlier, judges become aware of CPI through proactive and passive channels, and there is no formal court procedure or requirement to collect firms’ board information. If considered necessary, trial judges will report the facts and pertinent background information along with their tentative ruling to the committee who obtains an indirect knowledge of relevant facts; but committee members usually do not hear cases themselves (Q. Zhang, 2003). In reviewing such “significant,” “complex,” or “difficult” cases, the adjudication committee, under the guidance of the PLAC, is more likely to consider the broader political and social implications of their ruling (L. Li, 2016; Potter, 1999; Zhu, 2006). Therefore, in such cases the measurement can still be used as a proxy for the complexity of interests that the court has to accommodate before reaching a decision, and judges tend to favor broadly connected enterprises over narrower factional interests.
In my data set, the mean and median of CPI for the disclosing firms across all cases are 0.17 and 0.14, respectively. The maximum number of connected board members is 16, obtained by Northeast Securities Corporation and China Minsheng Banking Corporation. Northeast Securities has 30 board members, and 15 of its 16 connected members had careers in the local Communist Party organs or government agencies. China Minsheng Banking has more extensive relationships at higher levels, with nine of the total 23 board members having had careers in the national Communist Party or government offices and six board members having served in the national legislature.
Control Variables
To address the potential endogeneity bias in using observational data, I control for factors that might simultaneously cause the firms’ political connectedness as well as their litigation outcomes. In the Online Appendix, I also include robustness checks that try to account for the bias arising from selection on the dependent variable: there is no information on those firms that chose settlement, arbitration, mediation, or other alternative dispute resolution mechanisms instead of litigation; the data set is limited to observable lawsuits that are adjudicated in courts.
For the control variables, Location indicates whether the court of adjudication is located in the announcing firm’s home province, the opponent firm’s home province, a third province, or the same province that both firms are registered in. 13 This is to address concerns about home court advantage and local influence (Liu, 2006). Considering that contract disputes are different from noncontract-related disputes in that contracts confer more predictability and legitimacy on the contracting parties’ claims, I include Types of dipsutes to account for the different potentials of political maneuvering. To control for differences in regulatory policies, Market indicates whether the announcing firm is listed in the Shanghai Stock Exchange or Shenzhen Stock Exchange. Total Assets and Total Profit control for the size and profitability of the announcing firm’s business operations, as large and well-performing firms may enjoy various favorable policies. To address concerns about “local capture” by lower levels of courts (Wang, 2016), I use Level to control for the four levels of courts in China’s judicial system. I also include a dummy for SOE to show that government ownership alone does not necessarily help firms win lawsuits. In China some industries are considered “strategic industries” by the state (e.g., industries related to natural resources and energy, national defense, telecommunications, infrastructure, banking, and finance) and may receive beneficial regulatory and legal treatments (Pearson, 2005). The judge is more likely to be sensitive to the political implications of her rulings involving such firms, so industry fixed effects are included. To account for the unequal quality of legal systems across subnational jurisdictions, I also add city fixed effects to all analyses. Finally, other common confounding variables such as firm age and stakes of the case are also taken into consideration.
The Dependent Variable
The dependent variable is whether the disclosing firm wins the lawsuit, which is a difficult concept to operationalize. The conventional literature defines a plaintiff’s success in corporate lawsuits as being awarded monetary benefit at trial (Lu et al., 2015). Wang (2016) follows the convention and defines that a disclosing firm wins the case if it is awarded any monetary compensation (greater than
Analyses and Results
Main Results
I first run a simple logit regression that includes some preliminary controls. Then, I conduct a series of robustness checks that take into account the nonannouncing firm’s different types of political connections and a variety of firm-level and case-level characteristics. The interactive models examine claims made in Hypotheses 2(a) and 2(b). I demonstrate how the empirical patterns are consistent with the political information theory.
In Table 1, Model 1 is the baseline model. It shows that the proportion of connected board members is positively correlated with winning the lawsuit, even after controlling for factors commonly thought to be affecting a court’s ruling. One alternative explanation for the CPI theory is that, when a firm has a high percentage of connected board members, it may be the sheer size of senior management with political ties that deters unfavorable rulings. Therefore, Model 2 takes into account the total number of connected board members. The results indicate that it is not the magnitude of political connections that matter for the judge, but the intensity of political embeddedness as measured by the board composition. Figure 1 shows that the chance of winning for the announcing firm increases as its ratio of politically connected board members increases. As the percentage of board members with political ties increases from 20% to 80%, the firm’s probability of winning the lawsuit increases from about 40% to 80%.
Firms’ Political Connections and Litigation Outcomes.
All models are estimated using logit regressions.
FE = Fixed Effects. *p < .1. **p < .05. ***p < .01.
Winning probabilities increase with corporate political information.
Models 3 to 5 take into account the political background of both the plaintiff and defendant. To distinguish between the two parties in a case, I call firms that disclose the lawsuit information used in this study as Firm A, and the disclosed opponent litigant as Firm B.
Models 3 to 5 control for the political connections of Firm B. 14 As mentioned earlier, the Communist Party’s PLAC oversees the entire judicial apparatus: the court, the procuratorate, the law enforcement agency, and the government’s legal bureau at the corresponding levels. Therefore, the PLAC has great institutional power to manipulate the judge’s decisions. Models 3 and 4 examine Firm B’s political connections with and without considering its ties to the PLAC respectively. I find that no single type of Firm B’s political connections (including with the PLAC) directly affects how Firm A’s CPI distorts the judge’s decision.
Model 5 considers the firm’s financial position. A firm’s level of indebtedness, the amount of taxes and fees paid to bureaucratic agencies, and revenue performance should all shape the firm’s relations with public sector actors such as state-owned financing institutions, financial regulators, and fiscal authorities (Faccio, 2010; Faccio et al., 2006; Khwaja & Mian, 2005; H. Li et al., 2008). Such business–government interactions may affect the judge’s attitudes toward the firm as well. Considering that high-stake cases might be dealt with differently than low-stake cases, the amount of monetary stakes involved in the case is also accounted for.
All models control for whether the announcing firm is a SOE. In previous studies, Chinese SOEs have consistently been shown to be advantaged in domestic courts (Firth et al., 2011; Lu et al., 2015; Wang, 2016). I find that, after controlling for the proportion of connected board members, the SOE indicator is no longer a significant predictor of litigation success. It implies that SOEs’ adjudicatory advantages mainly derive from their intensive ties with the party-state, and that political ties are most pronounced in a board membership that represent a broad spectrum of regime stakeholders.
The regression results are also robust to industry fixed-effects (104 coded industries), province fixed-effects (32 provinces), and city fixed-effects (218 cities). This provides evidence that the results are not driven by a particular mode of economic activity or certain regional patterns (e.g., income levels, natural resources, economic growth models, local political culture, etc).
If the political information theory is correct, then the CPI of the opposing litigant should mediate the effects of the announcing firm’s CPI. To show this, I interact the CPI of Firm A with that of Firm B. Figure 2 shows that as Firm B’s CPI gains intensity, Firm A’s CPI becomes less effective, which is consistent with my theory. The judge is constrained by the political information signals from both litigating firms. As one side’s political information indicates greater political capital, the other litigant would be increasingly cast in an unfavorable light. If a firm’s board membership reflects a greater share of politically connected interests, it enjoys greater judicial favoritism and experiences less judicial discrimination vis-a-vis its opponent. In additional robustness analysis I also use the difference in CPIs between the two parties as the explanatory variable, and the results remain the same. The difference in ratios (Firm A’s CPI − Firm B’s CPI) remains significantly and positively correlated with Firm A’s chance of winning the lawsuit against Firm B.
Conditional effects of corporate political information
Other Measurements of Political Connectedness
In this section I examine the influence of single dimensions of political connectedness on lawsuit outcomes. In Table 2, Model 1 of Panel (A) shows that simply being an SOE does not significantly affect litigation outcomes. Model 2 also takes into account Firm B’s political connections and other firm-level characteristics. Model 3 shows that increasing the share held by SOEs in a company increases that company’s chance of lawsuit victory, although the results have greater uncertainty with additional controls in Model 4. Therefore, the adjudicative advantage of SOEs should not be taken as given and warrant more investigation (Firth et al., 2011; Lu et al., 2015). Models 5 and 6 show that having board member(s) with prior experience serving in the central government or CCP central committee helps the company win lawsuits, although the effect size is much smaller than that of CPI in Table 1. Models 7 and 8 show that board members’ prior work experience in a local government body or a local Party committee does little for lawsuit success.
Single Indicators of Political Connectedness.
The political connection indicators are all dummy variables with a value of 1 if any board member(s) has had work experience in that political body, and 0 otherwise. SOE = state-owned enterprise.
FE = Fixed Effects. *p < .1. **p < .05. ***p < .01.
In Panel (B), Models 1 and 2 show that board member connections to the NPC or NPPCC provide some adjudicative advantages. But such political ties at the local level do not help much with litigation, as shown in Models 3 and 4. Meanwhile, board member ties to the national (Models 5 and 6) or local (Models 7 and 8) CCP congresses also do not have any significant impact on lawsuit outcomes. Results in Panel (C) show that neither connections with the military nor with the powerful PLAC which oversees the entire legal apparatus are strong determinants of litigation outcomes. The findings imply that even corporate personnel ties to judicial bodies are not powerful enough to sway the judge’s ruling.
In summary, compared with CPI, these single political connection indicators are not as consistent or robust in predicting lawsuit outcomes. 15 Therefore, the results suggest that no single dimension of a firm’s political connectedness with the party-state is decisive enough in the judicial process. Various sources of regime interests exert influence over the judge, and the judge takes an eclectic approach that incorporates different sources of political signals.
Dispute Types
In this section, I examine whether dispute types are driving litigation results. It might be possible that corporate political background is a more influential factor in adjudicating certain types of cases, but not in other case types.
The data set categorizes all cases into three types of disputes: contract disputes, loan disputes, and cases other than contract disputes or loan disputes. I use different ways to examine whether dispute type is a confounding factor for lawsuit outcomes. In Table 3, Models 1 and 2 include dummy variables for three case types. For Models 3 to 8, I create binary indicators for contract disputes (Models 3 and 4), loan disputes (Models 5 and 6), and other types of disputes (Models 7 and 8), respectively. Models 2, 4, 6, and 8 include additional controls for Firm B’s political connections and the disclosing firm’s finances.
Different Case Types..
FE = Fixed Effects. *p < .1. **p < .05. ***p < .01.
The results show that CPI’s effect is still consistently significant after controlling for dispute types in different ways. The results also indicate that firms are more likely to win contract disputes than noncontract-based disputes. This is consistent with the interview responses from trial judges who suggested that there is little room for political maneuver in adjudicating contract-based disputes. The judges remarked that they have to honor the agreement made among the disputing parties, and it is relatively easy to rule on the claims based on the rights and obligations delineated in contractual agreements. Therefore, the judges generally agree that contract- and loan-related lawsuits are more predictable than other types of cases.
The judges’ comments are partly supported by the evidence in Table 3. But in spite of the differences in the nature of claims between agreement-based and nonagreement-based disputes, corporate litigant’s political endowment still has a significant and sizable impact on lawsuit outcomes. Meanwhile, comparing the coefficients for CPI between Models 3 and 7 or between Models 4 and 8 shows that the magnitude of CPI’s effect is smaller when adjusting for contract disputes than when adjusting for other nonagreement-based dispute types (
Career Advancement Incentives and Professional Needs
The political information theory predicts that the judge’s conformist tendency is shaped by her career advancement incentives and the needs for professional support. In this section I show evidence that (a) the stronger incentives of career advancement the judge has, or (b) the more professional support from other authorities is needed for the court to function, the more subservient the judge is to the political pressure.
Figure 3 shows how the effects of CPI vary by court levels. The interactive model controls for the firm’s national and local connections with all party-state organs and other case- and firm-specific characteristics. It shows that, after taking into account the firm’s connections with local courts and other party-state institutions, CPI still has a significant and positive effect on the probability of winning at the Basic People’s Court and the Intermediate People’s Court. The effect’s magnitude is larger at the basic courts than at the intermediate courts. Notably, CPI does not sway the judge’s decision if the litigation is fought at the High People’s Courts 16 . The effect size at high courts is close to zero with no distinguishable direction. It implies that, judges at high courts are more impartial and do not systematically favor a certain party, even after taking into account all relevant political information.
The effects of CPI across court levels.
I argue that this empirical pattern supports the career incentives hypothesis. In China, judges serving in higher levels of courts are usually better compensated and command greater political authority (H. Fu, 2016; W. He, 2012; Wang, 2013a). Law school graduates generally need to start in lower courts and work their way up, hoping to be appointed to more important and rewarding government offices higher up in the bureaucratic hierarchy (Peerenboom, 2008). Therefore, lower levels of judges are more motivated in their daily work to make sure that their rulings look after the needs of important party-state vested interests. In contrast, judges at higher levels of the judiciary do not need to cave in to political pressures as much. Their chances of career advancement are much more limited, and their institutional obligation to uphold judicial integrity adds another layer of insulation from political influences. Therefore, high-level judges usually place more weights on cases’ legal merits than junior judges lower in the judicial hierarchy.
A major component of a judge’s career incentives is her practical needs for professional fulfillment. It means that judges value the capability to fulfill the obligations of judgeship. Therefore, they want to obtain the necessary operational support from other state administrations to smoothly carry out judicial duties.
To address the problem of inadequate court funding, a fiscal centralization reform was announced in 2008 as part of a larger judicial system reform package 17 . The court funding centralization provision stipulates that the central government will be fiscally responsible for the budgets of local courts and procuratorates. The local government no longer pays for (or only pays for a small proportion of) judges’ salaries and benefits and other court expenses for personnels, equipment, infrastructure, and operations. The reform was intended to financially empower local courts as a way of insulating them from local protectionism and establishing more independence, although there has been no systematic empirical tests of the effects of this judicial reform (Henderson, 2010; Peerenboom, 2009).
To test the prediction about judges’ needs for professional fulfillment, I examine separately CPI’s effects before and after 2008, the starting year of the reform. One concern is that litigants have forged different patterns of political ties with relevant decision-makers since 2008, which, together with the court’s better fiscal position, changes the judge’s behavior. To address this concern, I control for the disputants’ party-state connections at all levels and of all types. Therefore, even if the relationships between litigants and various power-holders have changed after 2008, it should not affect how CPI distorts the judge’s ruling. In other words, the only thing whose change matters after 2008 is the local government’s budgetary power over the local court. With more sufficient court funding being directly distributed by Beijing, judges have greater capacity to fulfill their professional duties. If my prediction is correct, CPI should have stronger effects on local judges before 2008, and significantly weaker effects after 2008.
Figure 4 shows that before 2008, financially constrained local courts have a statistically distinguishable pattern of ruling in favor of the party with greater political endowment. After local court funding is centralized, better-supported judges at the Basic People’s Court rely less on local administrations to meet their judicial obligations, and are thus less likely to be affected by external political considerations. The magnitude of CPI’s effect at basic courts is decreased, and the effects are no longer significant at both basic and intermediate courts. It suggests that financially empowered local judges have more freedom and audacity to issue independent judgments against local political interests. Nevertheless, Chinese judges’ career is still not adequately secured and fully insulated from the intricate web of political influence. Therefore, judges across all levels of the judiciary are still, to some degree, sensitive to litigants’ political background.
The impact of court funding centralization reform.
Conclusion
Ginsburg (2010, p. 271) argues that, “[t]ypically authoritarians will empower courts to help provide predictability in the economic sphere without hindering core regime policies or interfering in the political sphere,” and that “we can be optimistic of the continued trajectory of judicial independence in China, at least for the vast majority of cases that do not have major political overtones.” I contend that this type of utilitarian theory of authoritarian judiciaries, which is common in the traditional literature, is insufficient for two reasons. First, there are multiple and competing power centers that exist at all levels of the ruling regime. Judges face a complex web of vested interests that represents fragmented political preferences of the ruling coalition. Second, judges under authoritarianism still have their own incentives of career advancement and professional fulfillment. They strategically cater to the needs of political interests to achieve personal objectives.
This article proposes a political information theory that takes a more comprehensive perspective of commercial litigants’ political connections. I argue that the composition of corporations’ board membership conveys information about the embeddedness of regime stakeholders. A higher proportion of board members with political ties of any kind indicates greater political endowment and more reliable endorsement by the party-state regime. The partnership forged between private entrepreneurs and party-state insiders enjoys protected rent-seeking opportunities and favorable legal treatments, which ultimately advances regime insiders’ own business interests. In commercial lawsuit cases, corporate litigants capitalize on their political resources to exert pressure on the judge. The more politically embedded the firm is, the better leverage it has to influence the judge. Therefore, even in economic, nonpolitical lawsuits, judges will not be independent if the litigants’ political information signals deep involvement of regime interests. Meanwhile, the effects of such political information is mediated by judges’ own strategic calculations. Lower ranking judges with stronger promotion incentives and in underfunded courts that rely on the support of other government branches are more likely to conform to the political information signal.
One implication of the study is that selective judicial independence has potential benefits for regime insiders and peripheral actors who can capture the institutions by being connected to the insiders, although realization of such benefits delivered by malleable institutions is highly uncertain. Weak judicial institutions susceptible to external influence engender rent-sharing opportunities for the alliance between regime stakeholders and the connected crony interests. Research has shown that politically connected firms are more willing to litigate in authoritarian courts that are corrupt and dependent (Ang & Jia, 2014; J. Li, 2017). Beyond the case of China, there is also evidence suggesting that Russian businesses have strong demands for using legal institutions to protect property rights even when state institutions are ineffective or corrupt (Gans-Morse, 2017a, 2017b; Hendley, 2006). Lambert-Mogiliansky et al. (2007) show that firms’ benefits from bankruptcy proceedings in Russian commercial courts are shaped by the political power of regional governors and their relationship with the federal center. Popova (2010) argues that in the nonconsolidated democracies of Russia and Ukraine, intense political competition magnifies the benefits of subservient courts to incumbents, thus reducing judicial independence. Even in democratic settings, firms may prefer “captured” regulatory institutions when firms can employ their political resources to shape policymaking procedures and outcomes in their favor (Carpenter & Moss, 2013; Dal Bó, 2006; Laffont & Tirole, 1991).
The article also has implications for the global promotion of judicial independence, especially in authoritarian regimes where judges are subordinate to multiple principals. Judges under authoritarianism may be more strategically responsive to diverse socio-political prerogatives than suggested by existing scholarship. The amount of agency exhibited by authoritarian judges is comparable to the strategy of “tactical balancing” exercised by Brazilian high courts in the postauthoritarian period (Kapiszewski, 2011). Chinese judges similarly need to consider the broader socio-legal implications of their ruling in trying to balance the interests of multiple sources of political power, sometimes through the logic of “rough justice” where they exploit tensions between party-state principals and local agents when there is ambiguity in diverging institutional and personal interests (Stern, 2010). This kind of practice is consistent with the regime’s political objectives of maintaining long-term stability and resolving intergroup conflicts, which is similar to Brazilian high courts’ attempts to manage conflicts between the judiciary and the elected leaders during times of intense political and economic transformation. This study can explain why economic disputes still cannot be fairly adjudicated in spite of authoritarian leadership’s attempts to instill more professionalism in the judiciary (Liebman, 2007a; Pei, 2001a).
An area of future research is to examine more closely the conditions under which selective judicial independence may or may not work given the strategic judicial behavior of dependent courts. This article shows that, in the case of China, when the interests of involved regime insiders are highly complex and ambiguous, judges strategically implement selective judicial independence and it is not always clear when the court will be captured or which type of political connectedness can deliver the rents. Future work could examine, in other institutional contexts, how nuanced political dynamics complicate judges’ work in putting into practice the version of “rule by law” desired by authoritarian leaders. One key factor may be a developmental trade-off faced by autocrats. Authoritarian regimes’ institution-building efforts need to balance two competing incentives: (a) the need to attract and retain private capital, both domestic and foreign, to generate economic growth and expand the pool of exploitable rents and (b) forging cronyist rent-sharing arrangements between private enterprises and political insiders to benefit and satisfy members of the ruling coalition. Hong Kong’s rule of law institutions have increasingly experienced the inherent tensions between these two objectives (Munger, 2019; “The New Age of Crony Capitalism,” 2014). Future studies could look at other developmental authoritarian regimes such as Singapore, Egypt, Russia, and Vietnam to study the conditions under which political considerations trump or are shadowed by market-enhancing motives.
Supplemental Material
cps_revised_appendix_oct2019 – Supplemental material for The Role of Corporate Political Connections in Commercial Lawsuits: Evidence From Chinese Courts
Supplemental material, cps_revised_appendix_oct2019 for The Role of Corporate Political Connections in Commercial Lawsuits: Evidence From Chinese Courts by Jian Xu in Comparative Political Studies
Footnotes
Acknowledgements
The author would like to express his gratitude to Yuhua Wang for his generous sharing of the Database of Chinese Corporate Lawsuits (DCCL). This paper also benefited tremendously from feedback offered by Yun-chien Chang, Tom Clark, Jennifer Gandhi, Xin He, Pablo Montagnes, Eric Reinhardt, Miguel Rueda, Teemu Ruskola, Jeffrey Staton, Lu Xie, and participants at the 2017 Asian Law and Society Association Annual Conference.
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The author acknowledges generous financial support for conducting the fieldwork and interviews provided by the Professional Development Support (PDS) Fund of Emory University Laney Graduate School.
Notes
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References
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