Research On China's Delisting System

China officially launched the delisting system in 2001 to ensure the listed companies'survival of the fittest, and promote the sound development of China's capital market. However, the implementation effect of China's delisting mechanism was not satisfactory. A considerable number of poor companies refused to withdraw from the market. How to explain this unique phenomenon of China's securities market, and to enhance the operability of China's delisting mechanism and form a virtuous circle and a situation of survival of the fittest had important practical significance of the long-term development of China's securities market and of economic growth.Using system compare and empirical research, this thesis studied China's delisting system and its implementation effect, analyzed the reasons for the poor results of China's delisting system, and provided some suggestions on how to improve the effectiveness of China's delisting system. There were four parts in this thesis.Part one was introduction of the whole thesis. The background and meaning of writing this thesis, the review of literatures and the structure and research methods of this thesis were introduced.Part two focused on the compare of delisting system. Firstly China's delisting system was introduced, including the evolution of delisting system, delisting procedures and standards. Then foreign delisting system was compared with ours. The results showed that the number of China's numerical delisting standards was too little, and the non-numerical standards were not operable and covered limited scope, which was not conducive to make the exchange take the initiative in deciding which stock should be delisted.Part three which including chapter three and four, did empirical research on three kinds of stocks: the delisted stocks, being special treatment stocks and abrogated special treatment stocks. The purpose of doing empirical research on all special treatment stocks was to study the implementation effect of China's delisting system. The results showed that the delisting system in our country was not strict for a long time and it imposed little punishment on the inferior listed companies. Due to the above reasons, on the one hand, some listed companies can easily escape from being delisted and resulted in a considerable number of inferior listed companies remained in the market. On the other hand, the benefits of remaining in the market far outweighed the costs so that all listed companies had a strong desire to remain in the market. The loose delisting system of China made most of special treatment stocks can return to the market through short-acting and low-cost means. But from a long-term perspective, the loose delisting system was not conducive to enhance the quality of ST companies, and after removing special treatment, these stocks generally experienced a declining profit. The logistic analysis also showed that the quality and profitability of the ST stocks had no significant impact on deciding whether they can remove special treatments. This made listed companies pay little attention on improving their quality, which eventually led to the delisting system had little impact on improving the overall quality of listed companies in the long run.Part four, based on the above analysis, gave some suggestions on how to improve the implementation effect of China's delisting system.