Business Publications
Document Type
Article
Publication Date
8-2015
Volume
57
Journal
Journal of Banking & Finance
First Page
1
URL with Digital Object Identifier
https://doi.org/10.1016/j.jbankfin.2015.04.004
Last Page
16
Abstract
An interesting phenomenon for Chinese firms that list their stock both in China and abroad is that the overwhelming majority had gone public, and listed, abroad first. We find that when these companies return to China to issue stock and list, they experience poorer post-issuance stock and operating performance in comparison to purely domestic issuers. Also, they raise more funds relative to their sales, leave less money on the table for investors, and incur lower direct flotation costs. Among returning firms, those which raise higher proceeds relative to sales experience poorer long-run stock performance and lower Tobin’s q post issuance. Our results offer a new perspective on cross-listing, which we term “dressing-up-for-premium”. Firms from less-developed markets take advantage of the enhanced visibility and prestige associated with the foreign listing to issue shares domestically at inflated prices and favorable terms, and to raise greater proceeds than they can efficiently use.
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Notes
This article is an earlier version of an article published in the Journal of Banking & Finance. The final published article can be found at https://doi.org/10.1016/j.jbankfin.2015.04.004