Cross-listing,Property Right And Corporate Fraud

With the rapid development of global economy,the national boundaries of the capital market are gradually being broken.To realize cross-listing,some listed companies not only trade in the domestic stock market,but also list in the overseas market.In July 1993,Tsingtao Brewery listed in H-share market,and then it listed in A-share market in August in the same year,becoming the first domestic company to achieve cross-listing in H-share market and A-share market.Since then,more and more Chinese companies choose to cross listing,academia also pay attention to cross-listing and research it.On the one hand,previous studies have indicated that cross-listing can improve the effect of corporate governance,reduce the cost of capital,thereby improving the value of the company,which shows that cross-listing can bring positive economic effects.On the other hand,for the factors which influence corporate fraud,existing literatures mainly focus on corporate governance mechanism,the degree of external supervision and punishment,and enterprise’s financial report motivation.Few literatures study directly the influence of cross-listing on corporate fraud.In order to further understand the economic consequences of cross-listing and expand existing research,this paper attempts to explore empirically how cross-listing affects corporate fraud.In theory,compared with companies that list only in A-share market,companies that list in both H-share market and A-share market are in more strict legal environment and information disclosure environment.In this context,examining whether cross-listing can reduce the probability of corporate fraud is of theoretical significance and practical value.Companies that list in both H-share market and A-share market and companies that list only in A-share market are research objects.On the basis of the theory,this paper studies the influence of cross-listing on corporate fraud by using empirical methods.This article mainly includes the following parts.First of all,in order to provide necessary theoretical basis for the research,chapter 2 summarizes literatures and related theories about cross-listing,corporate fraud and property rights.Secondly,on the theoretical basis of information disclosure,judicial restraint and financial constraint,chapter 4 puts forward the research hypothesis 1,namely,compared with companies only list only in A-share market,it is less possible for companies that list in both H-share market and A-share market to be fraud;In order to study whether there is a significant different impact of cross-listing on corporate fraud under the different property rights,after considering principal-agent theory,financial constraint theory and fraud motivations,this paper puts forward the research hypothesis 2a and hypothesis 2b.Thirdly,the chapter 5 describes the process of sample selection,the data sources,and defines variables to construct the empirical model.On this basis,this part makes multiple regression analysis,robustness testing and further analysis using STATA software.Among them,the multiple regression analysis aims to investigate whether cross-listing suppresses fraud activities of enterprises,and whether there is a significant difference under different property rights;Further analysis includes two parts,the first part studies whether the impact of cross-listing on corporate fraud is different in state-owned enterprises with different degree of government intervention.The second part investigates the effect of cross-listing on different types of fraud.Finally,according to the theoretical and empirical research,chapter 6 draws the conclusions and implications,and points out the shortcomings of the article.Through theoretical analysis and empirical research,this paper draws the following conclusions:First,compared with companies list only in A-share market,it is less possible for companies that list in both H-share market and A-share market to make fraud,which suggests that cross-listing can effectively restrain fraud activities of enterprises.Second,there is no significant difference in the inhibitory effect of cross-listing on corporate fraud under different property rights.Third,in state-owned enterprises,the multiple regression analysis shows that the inhibitory effect of cross-listing on corporate fraud is more apparent in the group with stronger government intervention.Compared with enterprises with weaker government intervention,there are more corporate fraud activities in enterprises with stronger government intervention,so the inhibitory effect of cross-listing on corporate fraud is more prominent.Fourth,fraud can be divided into four types,including fraud about information disclosure,fraud about market transactions,fraud about enterprise funds,and other types of fraud.The empirical results show that cross-listing can reduce all aspects of corporate fraud activities.Maybe the innovation of this paper lies in that studying how cross-listing impact corporate fraud offers a new angle about economic consequences of cross-listing and influence factors of corporate fraud,and expands the existing research.This article has the following deficiencies:The variable of corporate fraud only considers disclosed violation information in the CSMAR database.Samples that are not considered to be involved in fraudulent activities may have been corrupt but has not been discovered,which affects the accuracy of the research.