| The globalization of the marketplace for capital and the pervading of information technology in the capital market have obscured the lines between country borders. In response to this globalization trend, increasing numbers of companies have chosen to raise capital through equity issues beyond the borders of their home market to satisfy the growing demand for capital. This paper examines the foreign listing experience of Chinese firms. Specially, I look at Chinese firms' cross listing in Hong Kong and the U.S. The relation between some motives of cross-listed firms and some characteristics of foreign exchanges is the question I aim to address in this paper. Since the first Chinese company listing in Hong Kong in 1993, more and more Chinese firms has decided to list in foreign markets. There are considerable differences between listing in domestic markets and foreign markets, such as the list standards: the number of shares and shareholders, the disclosures of accounting information. Meanwhile, there are some costs, which are due to the dissimilar in culture. However, more and more Chinese companies have determined to list on foreign markets. What does attract them? What will cross-listing bring them about? In other words, what is determined the choices of foreign listing? The research in this field mainly focuses on the macro market, thus engenders the Market Segment, Bonding Hypothesis. The research in this field mainly focuses on the macro market, thus engenders the Market Segment, Bonding Hypothesis. In this paper, I analyze the phoneme at the micro lever ——the company perceptive. In this paper, I outline the motives why companies may want to list on an exchange outside their country of incorporation, either as their first port of entry into the public equity market or after having already listed on their domestic exchange. First of all, companies may list abroad for financial reasons. Second, companies may list abroad for the proportions of production market, and the company governance. Therefore, this paper try to analyze the phenomena through the eyes of companies.An examination of Chinese foreign stock listing is timely and warranted: as the sustaining development of China economy, more and more foreign investors are interested in Chinese companies and the major overseas stock exchanges are competing for attracting Chinese companies to list. Meanwhile, there has also been a surge in the number of Chinese firms' foreign listings in the last 10 years in the U.S., Hong Kong, and Singapore, etc. and as the Chinese economy continues to expand, many more Chinese firms are interested in listing their shares overseas. The Chinese Securities Regulatory Commission also recently simplified the approval process to make it easier for Chinese firms to list on foreign stock exchanges. The paper is organized as follows: Section 1 presents the questions the paper aims to address and introduces a host of reasons for cross-listings, including hypotheses relating to investor recognition, access to capital, protection of minority shareholders, and improvement in information environment. In Section 2 I provide background information concerning the listing of Chinese companies in domestic and foreign markets. Section 3 analyzes the relation between some motives of cross-listed firms and some characteristics of foreign exchanges. In Section 4 I use panel data to investigate the difference in investment sensitivity to cash flow for three groups of cross-listed companies. In this section I give two hypotheses:I. Hypothesis: The motives of Chinese companies listing in Hong Kong market may raise capital from domestic market or other markets.II. Hypothesis: Compared with Chinese companies listing in U.S. markets, those listing in Hong Kong market may raise more capital from the outside of companies. In order to examine the second hypothesis, I use the model, which was presented by Fazzari, Hubbard, and Peterson then using the panel data analyze three groups. Concluding and suggesting remarks a...
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