TY - JOUR
T1 - Why have many U.S.-listed Chinese firms announced delisting recently?
AU - Hu, Gang
AU - Lin, Ji Chai
AU - Wong, Owen
AU - Yu, Manning
N1 - Funding Information:
This research project was funded by Research Grants Council, University Grants Committee under grant number: PolyU 155249/16B . Hu acknowledges support from the National Natural Science Foundation of China ( NSFC No. 71471130 ).
Funding Information:
This research project was funded by Research Grants Council, University Grants Committee under grant number: PolyU 155249/16B. Hu acknowledges support from the National Natural Science Foundation of China (NSFC No. 71471130).
Publisher Copyright:
© 2018 Elsevier Inc.
PY - 2019/8
Y1 - 2019/8
N2 - In this study, we propose a new rationale for firms' delisting and going private decision: voluntary delist then reissue shares and relist in the “home” country, because of favorable government economic policy and regulatory changes. 29 (27) out of 127 U.S.-listed Chinese ADRs announced going private during 2015 alone (2011–14). Using these two waves of Chinese ADRs going private, we first examine three potential rationales proposed by prior literature, namely, undervaluation, free cash flows and cash holdings, and financial visibility. We find support for them generally, especially for the undervaluation hypothesis. More importantly, we provide evidences supporting our new rationale: government policy changes, which played a significant role in the 2015 wave of Chinese ADRs going private. Overall, our study highlights intensive competition among major international stock exchanges and the importance of government policy in the modern era of increasingly inter-connected global capital markets.
AB - In this study, we propose a new rationale for firms' delisting and going private decision: voluntary delist then reissue shares and relist in the “home” country, because of favorable government economic policy and regulatory changes. 29 (27) out of 127 U.S.-listed Chinese ADRs announced going private during 2015 alone (2011–14). Using these two waves of Chinese ADRs going private, we first examine three potential rationales proposed by prior literature, namely, undervaluation, free cash flows and cash holdings, and financial visibility. We find support for them generally, especially for the undervaluation hypothesis. More importantly, we provide evidences supporting our new rationale: government policy changes, which played a significant role in the 2015 wave of Chinese ADRs going private. Overall, our study highlights intensive competition among major international stock exchanges and the importance of government policy in the modern era of increasingly inter-connected global capital markets.
KW - ADR and CDR
KW - Delisting and going private
KW - Government policy and regulation
KW - Share reissuance and relisting
KW - Undervaluation
KW - Variable interest entity
UR - http://www.scopus.com/inward/record.url?scp=85057284497&partnerID=8YFLogxK
U2 - 10.1016/j.gfj.2018.10.002
DO - 10.1016/j.gfj.2018.10.002
M3 - Journal article
AN - SCOPUS:85057284497
SN - 1044-0283
VL - 41
SP - 13
EP - 31
JO - Global Finance Journal
JF - Global Finance Journal
ER -