Overseas listing as a policy tool: Evidence from China's H-shares

Qian Sun, Hin Sang Tong, Yujun Wu

Research output: Journal article publicationJournal articleAcademic researchpeer-review

22 Citations (Scopus)

Abstract

We investigate why the Chinese government chooses to perform share issue privatization (SIP) of its state-owned enterprises (SOEs) in Hong Kong, despite the benefit of facilitating the domestic stock market development if performing SIP in China (Subrahmanyam and Titman, 1999) and the higher cost to list in Hong Kong. We address this issue by arguing that the positive effect of SIPs on the development of the domestic market may have limitations, especially when the domestic market is not well developed and cannot absorb rapid and large-scale SIP activities. To maintain domestic market order, it may be optimal to carry out SIP in overseas markets. Furthermore, by listing shares in developed overseas markets, SOEs from the less developed countries could leverage on the overseas markets' better accounting, governance, and legal standards. By examining a sample of 92 Chinese firms listed in Hong Kong and the relevant control samples of purely domestically listed Chinese firms during the period of 1993-2006, we find supporting evidence for both arguments.
Original languageEnglish
Pages (from-to)1460-1474
Number of pages15
JournalJournal of Banking and Finance
Volume37
Issue number5
DOIs
Publication statusPublished - 1 May 2013

Keywords

  • Corporate governance
  • Market order
  • Overseas listing
  • Privatization
  • SOE

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

Cite this