Research On Foreign Delisting Decision-Making Model Of Chinese Firms

With the apparent overestimation of the market value of national capital market,many Chinese enterprises voluntarily delist from foreign capital market through privatization in 2015.However,the attitude toward the policy of return of China concept stocks to A-share market in 2016 is whirling and the fact that a large number of returns of China concept stocks to A-share market no longer exists,which may affect the China concept stocks companies that have been intending to return to A-share market through privatization.Due to the large number of shareholders and the separation of ownership and management rights,the management of listed companies has de facto control over them and plays an important role in the decision-making of foreign delisting of enterprises.Based on the management perspective,the decision-making model for foreign delisting of Chinese enterprises has been established in this dissertation where the trade-off process and optimum time point for decision making have been discussed in management's decision-making of foreign delisting from two cases of the presence and absence of the managerial ownership.The impact of foreign delisting decision making on management benefits and shareholders' returns has been analyzed and the impact of managerial ownership on all shareholders' income and the residual income in foreign delisting decision-making process has been discussed.In addition,by selecting an enterprise seeking for privatization as a case,this dissertation describes the whole process of management's decision-making for privatization.This dissertation demonstrates that:(1)Whether or not there exists managerial ownership,only if the total revenues by privatization exceed that of maintaining foreign listing,will management choose to delist from the developed foreign capital markets,otherwise,the management will give up foreign delisting.(2)Whether or not there exists managerial ownership,there is a threshold for the net cash flow of the company that can be used to determine whether management is implementing privatization decision-making.When the net cash flow value exceeds the threshold after the privatization and delisting so that the privatization and delisting can make maximum total revenue for management increase,the management should implement the privatization decision;otherwise,the management should abandon the privatization.(3)As far as the level of investor protection for maintain the foreign listing is concerned,the lower the level of investor protection in China capital markets and the higher the transfer's proportion of private gains after the privatization and delisting,the greater the private gains of management will achieve.(4)Whether or not there exists managerial ownership,only if the net amount obtaining by subtracting benefits due to maintaining the listing from cost saving is less than the difference between maintaining the listing and abandoning listing,will the delisting decision be harmful to the total revenue of all shareholders;otherwise,the total revenue of all shareholders will increase.