There is a common refrain that's often sung by Chinese commentators: shaping up the country's restive financial market has to start with harsher regulations and stiffer penalties for rule-breakers. Advocates of this premise are fond of bemoaning the weakness of new rules and frequently point out the potential loopholes in various policy devices; but perhaps what regulators really need is not a sharper rod to whip offenders back in line, but juicier carrots for market players to chase.
A raft of new dividend regulations issued Monday from the Shanghai Stock Exchange (SSE) could soon show that incentives are the real missing ingredients in initiatives aimed at breaking unwanted behavior.
As many know, listed companies on the mainland A-share market have long been notoriously stingy when it comes to dispensing dividends to investors. This is a problem that Chinese financial and exchange authorities are eager to rectify, since the lack of dividends promotes speculation rather than investment in long-term business growth, undermining efforts to foster a value-oriented capital market.
Mainland companies' cash dividends equaled only some 25.3 percent of their profits from 2001 to 2011, well below the 40 percent average seen in many developed markets, local media reported.
Beijing police save female hostage
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