| There are two stock exchanges in Chinese Mainland. One is the Shanghai StockExchange, and the other one is the Shenzhen Stock Exchange. For Chinese companieswhich would like to be listed in the capital market, their financial and management levelsare relatively lower than the listing standards asked by the two Chinese stock exchange, orthey are in some industries which are restricted by China government. As a result, they areunable to be listed in the capital market. So, many Chinese companies have to choose acompromise solution which means going to be listed overseas. In this way, those Chinesecompanies acquired valuable money that they have dreamed of for years. And the topchoice of going listing overseas is America.VIE, which stands for Variable interest entity, is invented by the American financialaccounting standard committee first. If the investors have a dominant interest which is notdecided by the majority rights of voting but a series of complicated agreements, we call theentity a variable interest entity. VIE structure is the commonest resort chosen by Chinesecompanies. VIE structure has achieved remarkable success while the risks also begins to beexposed at the same time. The security price of companies adopting Vie structure has beenrising and falling from time to time because of being influenced by some outside factors.Based on the above fact, this paper sum up the industry distribution and history ofcompanies which went listing in America with VIE structure. These companies mainlyconcentrate on the industries of TMT meaning technology, media and telecommunication,educational training, biology&medicine and recycling energy. In the history of Chinesecompanies going listing with VIE structure, they have experienced three summits and threelow tides. Then we focus on the IPO scale, structure of going listing, the reason of goinglisting in America. The next step is to select some typical cases related to VIE structure.We want to summarize some factors which can affect the share price of those companiesrun with VIE structure. Among those affecting factors, some are rejected for the reasonthat they are not quantifiable. The remaining factors are money supply and currencyexchange rate. In the third chapter, we aim to do some empirical research on the twofactors. And the result confirms our hypothesis about the impact of money supply andcurrency exchange rate on the security price of companies with VIE structure.As for Chinese companies, they should make it clear that what their underlyingmotivation is in their going listing in America. Besides that, the potential risks of VIEstructure also should be considered by Chinese companies. They should be aware of howto find out their companies’ profit model and balance it with their prospect. Opportunity isvery crucial because companies may suffer serious loss in a bad timing or a bear market. And in order to decrease the misunderstanding between the investors and managementdepartment to the least level, it is advised that companies should enhance thecommunication on the VIE structure.At the same time, there are also some suggestions for the China securities regulatorycommission, Shanghai stock exchange and Shenzhen stock exchange. Firstly, theadmittance criterion on the industries such as technology, media, telecommunication,educational training, biology&medicine and recycling energy and so on should besimplified so as to make it possible to attract more promising companies could get accessto the domestic capital market. Secondly, on the basis of lessening the entrance difficulty,the supervision on the companies after they have accomplished the IPO should bestrengthened to stimulate companies to make use of the financing better and more efficient.It is believed that by institutional reform and innovation, the domestic investors couldshare the achievement of companies’ rapid growth. It is definitely a win–win outcome. |
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