Analysis Of The Motivation And Performance Of The Issuance Of GDR By A-share Listed Companies Under The China-europe Connect Mechanism

In recent years,with the deepening of China’s capital market opening to the outside world,more and more market financing methods are also accompanied by changes.Since the 1990 s,Chinese enterprises have opened the road of overseas listing.In 2015,China and the UK capital market to achieve interconnection,under this mechanism,domestic enterprises can issue Global Depositary Receipts(GDR)in the UK financing,but in 2020,with the introduction of the US Securities and Exchange Commission "Foreign Company Accountability Act",can not meet the requirements of the US Public Company Accounting Oversight Board for three consecutive years will be banned from listing in the US.As the channel for financing in the United States continues to narrow,more and more enterprises have financing needs.In order to solve this problem,the Chinese government has continued to provide strong support for the issuance of GDR at the policy level,expanding the Shanghai-London Stock Connect to the China-Europe Stock Connect,and providing new financing channels for enterprises.Enterprise issuing GDR has cost advantages,it is conducive to broadening financing channels and helps to enhance the international visibility of the enterprise.As China’s first entity listed on the London Stock Exchange in accordance with the "China-Europe Stock Connect" business rules(formerly the "Shanghai-London Stock Connect" mechanism),Yangtze Power raised a large amount of capital this time.However,it is worth exploring whether the issuance of GDR can release the value signal of the enterprise and contribute to the development of the enterprise.Therefore,this paper takes Yangtze Power as an example to analyze the motivation of its GDR issuance and the change of its long-term and short-term performance.Firstly,this paper defines the basic concept and expounds the theoretical basis.Secondly,it introduces the basic situation of China Yangtze Power and the listing process of GDR of China Yangtze Power,and analyzes the motivation of overseas listing of GDR of China Yangtze Power,including responding to national policies,enhancing financing ability,promoting business development and releasing corporate value signals;Thirdly,the paper studies and analyzes the GDR performance of China Yangtze Power Co.,Ltd.: Using the event study method to analyze the short-term market effect of GDR issuance,the results show that GDR issuance has a positive impact on the company’s short-term market performance;At the same time,two methods of financial index analysis and factor analysis are used to analyze the medium and long term performance of Yangtze Power’s GDR issuance,and it is found that the solvency,growth ability and profitability are improved slightly,which affects the operation ability and also has a certain boost to its comprehensive performance.At last,the paper draws the corresponding enlightenment from four aspects of overseas listing:basing on its own situation,keeping up with policies,rationally developing business and strictly disclosing information,and provides some references for other GDR issuing companies.