Research On The Impact Of Cross-listing On Corporate Investment Efficiency

In the 1990s,the market economic system reform led by the Chinese government and the shareholding system reform of state-owned enterprises promoted the first batch of stateowned enterprises to go to Hong Kong to realize the cross listing of A shares and H shares.This strategy reflects the good "bonding" will of the Chinese government: not only to raise capital,but also to help state-owned enterprises establish modern enterprise system and improve corporate governance structure by binding the relatively mature capital market.The first batch of AH cross listed enterprises also provided a demonstration for shareholding reform at that time.At the beginning of this century,faced with the public opinion of the loss of state-owned assets and the hollowing out of domestic capital market,SASAC required large-scale state-owned enterprises to return to A-share,and promoted a large number of Hshare companies to return to A-share to complete cross listing.Throughout the historical process of AH cross listing of Chinese enterprises,government plays an important prat.Therefore,Chinese cross listed enterprises often bear additional policy burden in addition to completing their economic goals.These companies did not improve the governance level or enhance the value of enterprises due to the binding of Hong Kong's advanced investor protection system,but showed the distortion of operation and the reduction of capital allocation efficiency under the government intervention.At the same time,in the context of reform and opening up,China has initially established a market economy system,and the goal of state-owned enterprise reform has basically been achieved.In particular,since the 18th National Congress of the Communist Party of China,the Chinese government has paid close attention to party conduct,Party discipline,simplified administration and decentralized power,deepened supply side structural reform,and accelerated the improvement of the socialist market economy system;China's capital market basic system has been gradually completed,and legal supervision has been continuously strengthened;the Shanghai Hong Kong stock connect and Shenzhen Hong Kong stock connect have been opened step by step,and the mainland securities market and Hong Kong market have been interconnected;the Shanghai London stock connect has been preparing for many years and has also landed,boosting the internationalization process of a shares and RMB.During the process of gradual reform in China,does AH cross listed company still show investment distortion under policy intervention? In addition to binding a good governance system,do AH cross listed companies have other advantages over pure A-share listed companies?Based on effective market theory,investment theory,cross listing information channel hypothesis and capital market feedback effect model,this paper takes the perspective of stock price informtiveness and constructs an analytical framework of "cross listing-capital market information efficiency-enterprise resource allocation efficiency".Using Chinese listed companies in recent decade as samples,the empirical study shows that AH cross listed companies have information advantage over A-share companies,which is reflected in the increase of the company level information content in the stock price.Because the stock price provides more reliable information about investment opportunities for company managers,and assists the decision-making of enterprise investment,the cross listed enterprise investment is more sensitive to the stock price.The capital market guides the resource allocation of the real economy through the stock price.The increase of stock price informativesness will inevitably affect the investment efficiency.This paper shows that the information advantage of AH cross listed companies is conducive to the improvement of their investment efficiency.Specifically,this paper initially conducts normative analysis to clarify the literatures and theoretical basis,analyzes how capital market impact on the real economy,and points out that the policy burden of AH cross listed enterprises and the resulting reduction in capital allocation efficiency have changed.To prove this hypothsis,the stock price informativeness is selected as the research perspective,and the mechanism of cross listing influencing enterprise investment behavior through stock price informativeness is included in the framework of information effectiveness on resource allocation of the capital market,and "cross listing-stock price informativeness-enterprise investment efficiency" is the research pathway.We wonder whether there are differences in stock price informativeness between AH companies and others;and if there are differences,whether the information efficiency of capital market can be improved by the increase of stock price informativeness.The main conclusions of this research thesis are as follows:First,the stock price informativeness of AH companies is higher.The empirical research finds that,compared with non cross listed companies,AH cross listed companies have higher share price information contents,compared with other A-share companies.This advantage expands with the increase of institutional investors' shareholding ratio and analysts' attention in cross listed companies.Compared with the state-owned enterprises,the non-state-owned enterprises' share price information content is significantly improved after cross listing.This is in line with the investors' attention hypothesis and information channel hypothesis of cross listing.Cross listing makes enterprises obtain more attention from the participants in the capital market.They will tap the private information at the company level and reflect it in the stock price through trading.At the same time,information media such as analysts and institutional investors also promote the market information to integrate into the stock price faster,and enhance the information content of cross listed companies' stock price.Secondly,AH cross listing can improve the investment efficiency of the company,which is manifested in restraining over investment and alleviating underinvestment.This conclusion is still valid for HA cross listed companies.Moreover,cross listing can restrain the over investment of enterprises mainly through the improvement of corporate governance,and curb the private interest behavior of management;cross listing can alleviate the under investment by alleviating the sensitivity of enterprise investment cash flow and improving the underinvestment caused by the lack of cash flow.Thirdly,the cross listed companies can improve the investment efficiency by increasing the information content of stock price,which is manifested in restraining over investment and alleviating the operational underinvestment when the cash flow is sufficient.Moreover,cross listing can significantly enhance the investment price sensitivity of the company,that is,AH cross listing can influence the investment decisions of the management through the abundant external information in the stock prices of the two markets,which proves that there is stock price feedback effect in A stock market.Due to the existence of feedback effect,it is an effective way to improve the efficiency of capital allocation by improving the information efficiency of capital market.Cross listing can improve the over investment of enterprises by increasing the information content of stock price,which is mainly manifested in curbing the private interests of the management and reducing the agency cost,that is,the cross listed companies can effectively guide the allocation of resources through the stock price information,avoid the waste of resources and restrain the over investment of enterprises;the cross listing can improve the underinvestment of enterprises through the increase of the information content of stock price,mainly in alleviating the enterprise's operational underinvestment.These conclusions show that the improvement of stock price informativeness of cross listed companies is an effective way to realize the investment efficiency of enterprises.These conclusions not only enrich the relevant literature of AH cross listed companies in China,but also have practical significance.From the perspective of listed companies,due to feedback effect its price information content can guide the investment decision-making.The stock price fluctuation of cross listed companies has a certain reference value for the formulation of investment policies.Therefore,the relevant rules and system design of enterprise capital investment can consider bringing the stock price fluctuation into monitoring scope,or establish the early warning scheme of stock price fluctuation,and improve the relevant long-term investment decision-making method and mechanism according to the specific situation of the enterprise.In addition,through the establishment of a reasonable and effective stock price monitoring mechanism,managers of listed companies can reduce the behavior of deviating from the long-term value maximization goal caused by excessive pursuit of hot spots in the stock market.In addition,cross listed companies should not only pay attention to the fluctuation of domestic stock prices,but also the changes of stock prices in foreign capital markets.It is necessary to monitor the stock price fluctuation in the capital market of many places.From the perspective of capital market,improving the information efficiency of capital market is an effective way to improve the resource allocation efficiency of real economy.Regulators can improve the efficiency of capital market information processing through two ways.One is to strengthen the protection of the legitimate rights of small and medium-sized shareholders.A good property rights protection system is conducive to encouraging risk arbitrageurs to produce,collect and process the company's special information,which is reflected in the stock price through market transactions.The second is to strengthen the guidance of investors and the cultivation of information intermediary.The education and guidance of investors will help to improve their ability to obtain information.The cultivation of information intermediary in the market,such as analysts,credit rating agencies,auditors,etc.,will help to enhance their role in information acquisition and transmission.This has a positive effect on improving market information efficiency and capital allocation efficiency.The possible contributions of this paper are as follows:First of all,this paper links the enhancement of A-share information efficiency,the outcome of capital market reform,with the possible information advantages of cross listed companies.From the perspective of information efficiency of capital market,this paper reveals the information advantages of AH cross listed companies after the reform of nontradable shares: cross listing is a financing decision that can significantly improve the information content of the company's stock price.Secondly,this paper confirms the effective way to improve the investment efficiency of cross listed enterprises.Most of the existing studies are limited to cross listing and corporate value,ignoring the intermediate mechanism.This paper focuses on the role of stock price information content in cross listing and enterprise investment efficiency.It is found that Chinese cross listed companies can learn from market information and make more scientific investment decisions.Combined with the feedback effect of capital market,this paper proves that the improvement of information efficiency of capital market is an effective way to improve the efficiency of capital investment.Finally,the conclusion of this paper reflects the characteristics of China's institutional background.Combined with the background of AH cross listing system and capital market reform,this paper finds that after the completion of the split share structure reform,the information content of stock price,the investment-q sesitivity and the investment efficiency of cross listed companies are significantly improved,compared with the non cross listed companies.This conclusion also exists in the HA cross listed companies.Because most of the cross listed companies in China are state-owned enterprises,their investment behavior and market performance may show the characteristics of stages or phases,due to the national reform process.This provides a reference for the follow-up study on the behavior of cross listed companies in China.