China or the World? A Financial Reporting Strategy for Hong Kong's Capital Markets

Posted: 1 Mar 2012

See all articles by Karthik Ramanna

Karthik Ramanna

University of Oxford - Blavatnik School of Government

Gwen Yu

University of Michigan

G. A. Donovan

Asia Pacific Research Center

Date Written: October 4, 2011

Abstract

Set in 2010, the case discusses the strategic directions Hong Kong could pursue, particularly vis-a-vis China, as it seeks to preserve its preeminence in the region. In 2010, the Hong Kong Exchange announced that it would allow listed Chinese companies to report using Chinese GAAP without reconciliation to IFRS The exchange was responding to the demands of its largely Chinese clientele and also coping with increased global competition to attract listings from Chinese companies. However, there were concerns around whether this change would undermine Hong Kong's position as a financial center in the long term. Hong Kong's position as a global financial powerhouse was due in part to its rigorous emphasis on compliance and enforcement; allowing companies to report under Chinese GAAP, the practice of which was highly variable, could compromise Hong Kong's high corporate governance standards.

Learning Objective: To consider the impact of global versus regional competitive pressures in setting governance standards.

Suggested Citation

Ramanna, Karthik and Yu, Gwen and Donovan, G. A., China or the World? A Financial Reporting Strategy for Hong Kong's Capital Markets (October 4, 2011). Harvard Business School BGIE Unit Case No. 112-035, Available at SSRN: https://ssrn.com/abstract=2014239

Karthik Ramanna (Contact Author)

University of Oxford - Blavatnik School of Government ( email )

Radcliffe Observatory Quarter
Oxford, Oxfordshire OX2 6GG
United Kingdom

Gwen Yu

University of Michigan ( email )

701 Tappan Street
R3350
Ann Arbor, MI MI 48109
United States
7347635934 (Phone)

G. A. Donovan

Asia Pacific Research Center

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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