Research On The Returning Models And Effect Of The Split Of China Concept Stocks

In the early days,the relevant systems of China’s securities market were not sound,and some Chinese enterprises that were still in the development stage and had a great demand for financing were unable to meet the relatively strict listing threshold in China.In the situation where the funding needs cannot be met,some Chinese companies have turned their attention to the United States,which has a more complete and relaxed capital market system,and started the process of Chinese companies going public in the United States.However,in the current context of the further intensification of the game between China and the United States,relying on its leading position in the world financial market,the United States has begun to politicize securities regulation to crack down on Chinese concept stocks,and Chinese concept stock companies face serious delisting risks.By the end of 2021,the market value of concept stocks in the United States and China had plummeted to $1.1 trillion,accounting for only about 2% of the total market value of US stocks.At the same time,China continues to promote capital market reform and is about to implement a comprehensive registration system,providing continuous policy support for the return of Chinese concept stocks.In this environment,more and more companies in the United States and China are choosing to return to the domestic market.From the current successful cases,the mainstream regression model is to go public after privatization,while there are very few cases of spin off regression,lacking relevant experience and guidance.In this context,while retaining its listing status on the US stock market,Daqo New Energy Corp.has spun off its only core subsidiary,Xinjiang Daqo New Energy,to return to the Science and Technology Innovation Board for listing,forming a pattern where the parent company serves as a shareholding platform to list in the US and its subsidiaries are listed on the Science and Technology Innovation Board.It has become the first A-share listed company in history to spin off its main operating subsidiary in China and return to the market,demonstrating its exemplary effect.Therefore,this article selects Xinjiang Daqo New Energy’s return to the market as a research case,analyzing the reasons,models,and effects of the return from three aspects.In the regression motivation section,we mainly analyze the regression motivation of Xinjiang Daqo New Energy from domestic and foreign perspectives;In terms of regression models,the main analysis focuses on the regression process of Xinjiang Daqo New Energy and the key issues of audit attention;In terms of regression effects,the analysis mainly focuses on the market reaction after the return of Xinjiang Daqo New Energy,the impact on the parent company’s Daqo New Energy Corp.stock price,valuation based on residual income models,and operational performance from both financial and non-financial perspectives.The case study results indicate that in terms of regression drivers,there are mainly differences in valuation between the Chinese and American markets,deterioration of the regulatory environment in the United States,reform of the domestic stock market system,and accelerated promotion of photovoltaic development in China;In terms of the regression model,for the model of splitting the US China concept stock into domestic listings,the regulation in the United States is relatively loose,while there is no clear regulation in China’s domestic regulation.However,the focus is on compliance,independence,industry competition,and related party transactions for the listing of domestic subsidiaries in the split;In terms of return effect,Xinjiang Daqo New Energy’s market reaction was good after the return,which had a short-term positive effect on the parent company’s stock price.The valuation results showed that returning to the A-share market helped to enhance the company’s value and significantly improved the company’s operating performance.Based on the study of the case of Xinjiang Daqo New Energy,this article proposes corresponding suggestions from the perspectives of Chinese concept companies and Chinese regulatory authorities.For Chinese concept stock enterprises,it is recommended to make a rational decision to return,choose an appropriate return model,and attach importance to risk avoidance;For the regulatory authorities in China,it is recommended to improve the information disclosure system,establish a diversified return model for Chinese concept stocks,and guide the investment direction of the capital market.