A Study On The Change Of Financial And Operating Performance Of Chinese State-Owned Enterprises After Dual Listing

Dual listing refers to the listing of the same company on two different stock exchanges. Starting from the early 1990s, Chinese state-owned enterprises (SOEs) have been selected to dual listing by Chinese government agency to attract foreign investment and accelerate SOEs reform. Since 2001, with the progressive easing of dual listing policies, dual listing of Chinese companies has been taking place at a greater frequency, exerting a mounting influence on China's domestic securities market. At the same time, there is a lot of dispute in both the domestic academic community and securities industry over a number of key issues, including whether the practice of Chinese companies obtaining overseas listing and then returning to China for dual listing should be restricted or encouraged, and whether such practice is motivated by a desire to "rake in money" as the public opinion in the market suspects. Even government regulatory authorities have failed to taken a definitive stance on these issues. Given this ambiguity, it's very important that theoretical and empirical research on Chinese companies' dual listing behaviors be conducted as soon as possible.This study compares the financial and operating performance before and after postlisting A-share listing for 35 SOEs, which had been listed in Hong Kong before 2006 with the use of nonparametric methods. And it selects a control sample of pure A-share firms. The results show that overseas-listed Chinese companies enjoy more favorable financing conditions then they do in an overseas capital market by returning to their home country. But the companies'long-run financial and operating performance does not have any significant improvement with better financing conditions. It indicates that company management has failed to take adequate and rational advantage of better financing conditions. In other words, there is some truth to the suspicion of the domestic public opinion that overseas-listed Chinese companies returning to their home country for dual listing are actually taking advantage of favorable financing conditions in the domestic securities market to "rake in money". Then, it provides guiding viewpoints for reference by listed companies, investors and securities regulatory authorities.