Controlling shareholders have been caught for criminal activities everywhere, but there are a few reasons to give their backgrounds extra caution in China, says business analyst Shaun Rein, author of The War for China’s Wallet: Profiting from the New World Order to the South China Morning Post.
The South China Morning Post:
And a higher allocation for the Chinese market requires more sophisticated research and news alerting systems, analysts said.
“There are bad things everywhere – see Skilling with the Enron scandal in the US. But the amount of illegal activity is far higher in China,” said Shaun Rein, the managing director of China Market Research Group.
“Many executives – especially ones from the older generation – have pretty dirty backgrounds that investors need to be aware of. Due diligence should include the reputation analysis of senior executives,” he added.
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