Abstract

Since the 1990s，China’s capital market has developed rapidly，while showing a distinctive feature of emerging and transition，among which local governments exerted unique influence on contract implementation issues of listed companies’financing.This research attempts to explore this mechanism and its different sides，mainly using transaction cost analysis based on performance capabilities in the sense of new comparative economics.

The success of China’s economic transformation is largely attributed to China’s decentralization reform in the economic field.In the process of decentralization reform，local governments canhave a significant impact on many decisions.Therefore，in the analysis of China’s listed companies’financing contract implementation issues，we need to take local governments into consideration.China’s decentralization in economic and the special political promotion constitute a powerful incentive of economic development for local governments，causing a fierce competition between regions.Facing with high-intensity incentives，local governments have a different impact on the perpetrators of the listed companies’financing contract such as local courts and regulatory agencies，thus forming a listed companies’financing performance mechanisms，in which local government is deeply involved.On the one hand，because of the competition between regions，local governments have a strong incentive to intervene cases which involve local companies，coupled with the dependence of district courts on local governments about personnel and finance，as well as China’s economic and civil cases generally use the“defendant on plaintiffs”principle，make this motivation become a reality，weakening implementation capacity of the courts as a third party.On the other hand，the competition between regions also lead to competition for resources between the regions including the capital market resources，China’s securities regulatory agencies flexibly use its capital market resources distribution rights-their right to regulate the issuance of securities fully mobilized the enthusiasm of the local government to participate in the governance oflisted companies in theirjurisdiction，thereby enhancing their ability to implement.

This subject follow the process to put forward problems，analyze problems and solve the problem.First，we conducted a literature analysis about the question of the protection of investors by financing and the important function of local government.Then we used theoretical analysis and empirical method respectively to test the influence of local governments on the enterprises’IPO opportunityand we used empirical method to analyze the logic and consequences of local governments’behavior to implement contract of listed companies’financing in their jurisdiction（be in financial trouble and violations）.With the consequence of theoretical analysis and empirical research，finding the confine of a listed companies’financing performance mechanisms over depend administrative regulation and the government，we put forward suggestions respectively from strengthen court enforcement andimprove the regulation of securities issuance to fully understandthe role oflocalgovernment to optimize the performance mechanism oflisted companies’financing in our country.

The specific contents of this research are as following：

Chapter 1 is an introduction.It mainly explains the origin of this study，the questions，the research contents and possible theoretical contribution of the study.

In chapter 2 we conducted a literature analysis about the important role of local government on the financing contract.Firstly，we point out the significance of corporate governance issues caused by corporate finance and legal protection of investors on financing contract implementation.Then we presented literatures about the economic consequences，the country differences and the reasons of legal protection of investors respectively，as well as literatures about the great importance of government control on the implementation of financing contract to provide a basis for future research.Existed researches suggest that legal protection of investors have very huge economic consequences.These studies focused on differences in national legal sources，so they concluded that common law countries give investors greater protection than civil law countries.However，the law is constantly changing，sources of law generally do not change，so existed researches have many limitations on how to strengthen the legal protection of investors.The reform of investorlegal protection requires major reform in the legal system，it is rather difficult.Maybe its more sensible to explore functional convergence，namely to take some other alternative functional way，such as equity concentration，improving accounting standards，industry selfregulation，the establishment of special courts，the implementation of foreign supervisors，reputation and relationships and so on.In particular，the importance of government regulation on listed companies financing contract implementation get deeply discussedin the aspect ofincomplete legal theory andthe public implementation ofnew comparative economics.Finally，we analyzed the major role oflocal governments in listed companies financing contract combined with economic decentralization reforms since the late 1970s and intense competition among local governments causedby political promotion incentives.

Chapters 3 and 4 we studied the influence of local governments on the enterprises’IPO opportunity.In chapter 3 we tookIPO application during 2006 to 2012 as a sample to study the relationship between the nature ofproperties andIPO opportunities.We found that the nature of properties have no significant effect on IPO opportunities.The results showed that，because of the promotion of the transition process and the campaign of state-owned enterprise’reform has completed at the beginning of this century，China’s capital market has changed a lot in 2006 andhas entered a new stage ofdevelopment，in which equity financing is no longer discriminatedby the nature ofproperties.In the 4th chapter，we took the IPO application of private enterprises in 2006 to 2012 as a research sample，and observed the political relations both in corporate level and region level to research empirically whether political relations can help private enterprises get more IPO opportunities.The results showed that under the institutional environment in China，political relations as an alternative mechanism is playing an important role.

In chapters 5 to 6 we used empirical method to analyze the logic and consequences of local governments’behavior to implement contract of listed companies’financing in their jurisdiction.

In chapter 5，through analysis of local government“protection rent”under securities issued regulation，we studied the local government participate in risk resolving of listed companies’financial distress：monopoly rents is generated by the control of securities offerings by the central government，the competition of getting chance to publish securities among local governments transforms monopoly rents into appropriable quasi rent.In order to obtaining a chance of securities offering in future，avoiding the transferring of rents，the local government positively participate in dissolving financial risk of the companies which are in their jurisdiction.Theories analyzed above are supportedby empirical evidences.Take the listed companies which were in financial risk during 2005 to 2012 as our sample，studies have found that the situation of the financial distress of companies in jurisdiction has a significant influence on the proportion of the pass of applying for future securities offering，which is examined by the issuance examination committee.The local government will try their best to reduce financial distress of the listed companies in their jurisdiction according to their own executive ability.Research in this chapter is stage effective to administrative supervision of securities offerings in the transition period of China.Especially，a mechanical explanation and experience evidence is given to interpret the dissolving of financial problem of listed companies in their jurisdiction，which is positively participated in for the local governments.

The 6th chapter examines whether it exists a kind of mechanism and how does it exist under the weaklegal environment based on that the government regulation power spillover could strengthen the capacity of regulatory agencies to implement contract as a third party，and mobilize local government to solve violation risks of listed companies.The securities’regulatory agencies may take violation frequency and severity of listed companies in the jurisdiction into consideration when distributing IPO resources，so the local government will decide whether to implement or how much to implement for their own rationality.The study found that in the law enforcement mechanism，the company violation occurs may lead to a large market losses to investors，but the compensation investors may get by litigation is also large.However，under the control implementation mechanism，market losses and litigation earnings to investors are both small，because small and medium investors can observe contracts and the influence factors of them，and the information is reflected in stock price in advance.The higher the degree of local governments to perform the contract，the smaller loss of the companies’shares due to irregularities，because under the control implementation mechanism local governments assist the companies actively so the investors can get a degree of offset in the form of shares price fall less.

Chapter 7 provides suggestions for the optimization of the performance oflisted companies’financing mechanism.Based on the research conclusion of The 3th chapter to the 6th chapter，we put forward suggestions respectively from strengthen court enforcement and improve the regulation of securities issuance to fully understand the role of local government to optimize the performance mechanism of listed companies’financing in our country.In strengthening court enforcement on security tort，we should issue insider trading and market manipulation of civil compensation injudicialinterpretation as soon as possible，expanding the prepositional procedure，causal relationship and accredited investors damage.Rationally know the advantages of group litigation in the treatment of securities civil disputes.Pay more attention to settlement is an important approach tosolve the securities civil compensation cases，and play the important role of local government.On improving securities issue supervision，registration system rather than examination system is a good way.But because the stockissuing registration reform is a systemic reform of the whole capital market，it needs to be promoted gradually.Registration system is not a simple registration effective system.Its not to say that share issuance does not need to be examined anymore，its the way to examine needs to be reformed.The direction of the reform is that the governments delegate powers to the market，enlarging the adjustment function of the market.Securities regulation agencies should attach more attention to information disclosure in the future，weaken dependence on local government，strengthen responsibility of agencies where sponsors as the core，and intensify law enforcement.For the impact on the possibility and positivity of the local government taking participation in implement contracts of the listed companies’financing，it needs to be broke at a higher level.One direction is to change the local officials’promotion incentive mechanism，guiding local governments to actively promote improving marketization process in its jurisdiction，creating a fairly competitive environment，thus promote the formation of a more market-oriented implementation mechanism of listed companies’financing.

As an emerging and transition market，China’s capital market has made some achievements after 20 years ofdevelopment，research on China’s local governments andlisted companies’financing compliance mechanism has an inspiring meaning for the development of China’s capital market，it also has an important reference value for other emerging economies in transition.

Key Words：Securities regulatory；Local government；Listed companies；Enforcement mechanism of financing contract