The Potential Rise of Hostile Takeovers in China: Efficiency, Politics and Law

Institutional change is the functional result of multiple factors, which can also be applied to predicting whether hostile takeovers will potentially rise in the near future in China. Currently, hostile takeovers are yet to be a common practice for Chinese-listed companies. However, along with the end of the equity-division reform at the end of 2006, “hostile takeovers” has become a catchphrase in Chinese newspapers. In the context of expected rise of hostile takeovers in China, corporate law scholars have already carried out productive research in this regard through the lens of the multi-factor model, but these contributions still have clear shortcomings and gaps. Confronted with loopholes, this article raises three questions in line with efficiency, politics and law and then preliminarily answers them. Through this effort, it is expected that Chinese takeover jurisprudence can be amended in a timely manner so that it can adapt itself to the changing economic and political settings that frame hostile takeovers.