Corporate Governance Effect Of Chinese Companies Listed Overseas

Since the 90's of the 20th century, many domestic firms have chosen to list in oversea stock markets. Because the domestic security markets have been built only for a few years, its functions of financing and promoting corporate governance are imperfect with the defect of split-share structure and the lagging law building. It is beneficial to satisfy the capital needs and set up modern enterprise institution, especially corporate governance by listing oversea security markets. The sustained waves of domestic firms listing oversea provide cases to investigate the performance of oversea listing. Therefore, the dissertation inspects the effects of oversea-listing on the corporate governance, as well as business performance and firm value ultimately.Besides Introduction (Chapter â…  ) and Conclusion (Chapter â…§), the dissertation is composed of four main parts:Part One (Chapter â…¡) is about the literature, which reviews the contributions of the past studies on oversea-listing and corporate governance. Although studies on oversea-listing began long before, studies on oversea-listing and corporate governance have been lasted several years. This chapter reviews the literature of oversea-listing and corporate governance, especially the "bonding theory" and its evidence work. Then, the meaning to investigate the relation between oversea-listing and corporate governance is discussed.Part Two (Chapter â…¢) concerns the status quo of oversea-listing, which part investigates the history, situation, and oversea-listing motives. It finds that if the trend of firms listing oversea speeds up, with institutional establishment and financing function of domestic capital market can not be strengthened, the domestic capital markets would be Latin-Americanized. The risk of litigation faced by the oversea-listed companies is discussed in special. Then, the motivation of oversea-listing is analyzed from the respects of financing cost, bearing capacity, business effects, and regulation avoiding or bonding. It finds that: (1) Although direct costs of listing in domestic security markets are lower than in oversea markets, the indirct costs (including opportunity costs and Intangible Costs) are higher; (2) Since the domestic markets are small in scale and imperfect in institution, its bearing capacity for great scale financing is lower than the developed oversea markets. It's one of the most important reasons that many domestic firms chose to list abroad. (3) Listing in the developed oversea markets is beneficial to the former state-owned enterprises reform. Therefore, firms (especially the state-owned enterprises) "bonding"with the oversea markets regulation by listing abroad impels to set up good corporate governance. It's also motivation that domestic firms list abroad.Part Three, including Chapter â…£ and Chapter â…¤, is about the theories, which analysis the influences that oversea-listing do on corporate governance. Chapter IV presents the mechanisms that oversea markets influencing on the corporate governance in special. These mechanisms include regulation mechanism, monitoring mechanism, financing mechanism, pricing mechanism, controlling competition, managers market competition, medium reports, institutional shareholders and the creditors participating in the corporate governance.Based on the above analysis, Chapter â…¤ deals with the differences of security markets, which leads to the oversea-listed companies be restricted by the listed markets regulation. The differences that security markets bring to the listed firms in corporate governance are reflected by the different affects that each corporate governance mode, or more directly, the mechanisms of corporate governance contribute, as well as the investor protection levels that the listing markets have on the companies. The differences of corporate governance modes affect the listed firms to strengthen their corporate governance through mechanism such as regulating, monitoring, financing, pricing , controlling competition, managers market competition, medium reports, institutional shareholders and the creditors participating. The differences in investor protection affect corporate governance through the listing standard and local legal system which bonding with the firms listed.Part Four is composed of Chapter â…¥ and Chapter â…¦, which part examines the effects that oversea-listing do on corporate governance, as well as its reflections on operate performances and firm value. Chapter â…¥ directly tests the effects of oversea-listing on corporate governance. After the situation of oversea-listing introduced, we compare the environments of corporate governance in Hong Kong to that in mainland. Then, the effects that oversea-listing has on corporate governance is tested by comparing the governance level of those companies listed both in Hong Kong and domestic markets to those listed only in domestic markets. We use 12 indexes, which can be divided into internal and external corporate governance, to make quantitative analysis. It finds by comparison that those companies listed both in Hong Kong and mainland markets are better than those listed only in mainland in external governance indexes, but worse in internal corporate governance indexes. The differences in external governance indexes may come fromlisting place, while that in internal indexes from the ownership structure.Following the work of Chapter â…¥, Chapter â…¦ tests the relations between corporate governance and operation performance, firm value. We find that although corporate govenances are benefical to corporate values, the relations between corporate governances and corporate values are not strong. To the firms listed both in domestic and oversea markets, internal corporate govenances can significantly promote corporate values. Howerer, strict constraints (coming from oversea listing) strengthen information reports, which limits speculation. Therefore, oversea listing makes corporate market value converge to its real valuation.As the relations between corporate governances and preformences concerned, corporate governances are benefical to the performances of oversea listed firms. But to those firms listed dometicly, both internal and external corporate governances produce negative effects on firm's performances. It indicates that corporate governances of domesticly listed firms do not advance corporate decisions or even shareholders benefits. Therefore, if listing oversea markets, corporate governances will increase corporate operation performances by incentives and constraints from oversea markets.Chapter â…§ summarizes the whole work of the dissertation, with suggestion on oversea-listing and farther research put forward.