The Impact Of Cross-listing On Corporate Governance And Corporate Performance

With the rapid development of the capital market,cross-listing has become an important way to international capital movement and has caused widespread attention by academia and industry.Different from the internationally preferred cross-listing model that listing in domestic before going abroad,China ’s large central state-owned enterprises pioneered a new cross-listing model that listing in H-share market before listing in A-share market in the early stages of China’s capital market development in the 1990 s.So far,most cross-listed companies in China have chosen this model.There were many research literatures on cross listing,but most of them were based on empirical research,and had different conclusions.This paper selects YOFC,the only “A&H-share cross listed” enterprise in the optical fiber and cable industry,and tries to analyze the impact of cross listing on the company from two aspects: corporate governance and corporate performance.This paper introduces the motivation of cross-listing and its impact on corporate governance and governance performance by sorting out relevant literature on cross-listing at home and abroad.This paper also introduces the related theories of cross-listing and combs the development status of "A&H-share cross-listing" in China from three aspects: development history,development models and development characteristics,which are used as the background and theoretical support for the cross-listing case analysis of YOFC.In the case introduction section,this paper briefly introduces the company background,crosslisting process,as well as cross-listing reasons for expanding capacity demand and seeking A-share premium income of YOFC.In the part of case analysis,this paper analyzes the impact of cross-listing of YOFC on external governance from two aspects: regulatory environment and information disclosure level.Then the influence of cross-listing on internal governance is analyzed from the aspects of ownership structure,internal balance mechanism,investor relationship management and executive incentive;the impact of cross-listing on corporate performance is analyzed from corporate investment,profitability,solvency,operating ability and growth ability.Finally,this paper analyzes the impact of cross-listing on stock price by the event method.Through analysis and comparison,the main conclusions are as follows:The company that cross-listed in H-share before A-share returns to A-share cross-listing due to financing needs and seeking a high premium of A-share.After cross-listing,in the face of dual regulatory environment,the company actively improves the level of corporate governance and seeks better development,thus improves the level of corporate performance.The improvement of corporate governance level is due to the fact that after cross-listing,the company has improved its own restraint behavior and investor protection level to strengthen the company’s external governance,and on the other hand,has actively strengthened its internal governance in pursuit of better development.The improvement of the company’s performance level is because that on the one hand,cross-listing has broadened the company’s financing channels,the company has invested financing funds into the improvement of technology level and capacity expansion,which has improved the market share and market competitiveness of the product,thereby improving the company’s profitability and solvency;on the other hand,the high premium of A-share compared with H-share makes YOFC a good performance in the A-share market after the cross-listing,which released good news to the H-share market in the short term,then gains the H-share market’s recognition and promoted the short-term rise of H-share price.