An Empirical Research On Impact Of Dual Listing On Corporate Governance And Performance

Dual listing refers to the situation in which a company has its stock listed on more than one exchange. In recent years, more and more Chinese companies dual listed their shares both domestic stock exchange and foreign stock exchange although there are a few companies decided to dual listing a few years ago. Many companies listing in foreign stock exchange decide to issue their shares in domestic exchange as well as some companies listing in domestic exchange make the opposite decision. Dual listing is having an increasing impact on investors, listed companies and stock exanges.Three modes of dual listing are distinguishes according to the destination of initial public offering in the literature. The first refers to a company issues its shares to foreign stock exchange before it issues its shares to domestic exchange. The second refers to a company issues its shares to domestic exchange before it issues its shares to foreign stock exchange. The third refers a company issues its shares to both foreign stock exchange and domestic exchange at the same time. The thesis selects companies that chose the first and the second dual listing mode as our sample and examines the difference in corporate governance and performance of these companies between pre-listing and after listing period. Futhermore the paper analyses the impact of dual listing on the relationship between corporate governance and performance. And it provides some suggestion to investors, listed companies and the governanment.Firstly, this thesis reviews the existing literature on dual listing, including related theories and empirical studies. It proposes an analytical framework on the impact of dual listing on the relationship between corporate governance and performance through synthesizing the key elementsof these studies.Secondly, this thesis analyzes the policy background and process of dual listing in mainland of China and presents descriptive characteristics of the companies that dual list in HongKong stock exchanges.Thirdly, this thesis compares the difference in regulation environment between Chinese mainland and HongKong, including legal origin, corporate law and security law and rules on corporate governance. In addition, the paper compares the difference in quality of law enforcement for the two markets.Fourthly, this thesis make a case study based on Zhong Xing Telecom Co. LTD. that is the first company issuing its shares to domestic exchange before it issues its shares to foreign stock exchange. This paper studies the changes in corporate governance and performance after the company listed its shares in HongKong stock exchanges and examines impact of dual listing on corporate governance and performance.Fifthly, this thesis studies companies that issuing its shares to foreign stock exchange before it issues its shares to domestic exchange from longitudinal data and cross-section data. The paper examines changes in corporate governance and performance around dual listing based on longitudinal data of ten companies. Furthermore, the paper makes a comparision between 29 dual listed companies and a control sample based on cross-section data. It examines the difference in corporate governance and performance between dual listed companies and control sample, and also it studies impact of dual listing on the relationship between corporate governance and performance.Finally, this thesis makes conclusions from case study and empirical study and provides suggestions to investors, listed companies and the governanment. Meanwhile, it points out limitation of this thesis and future research directions.