The Influence Of "H+A" Cross-listing On The Corporate Governance

Cross-listing is usually considered as an effective external mechanism toimprove corporate governance. At present, literature about the influence of “H+A”cross-listing on companies’ governance from the view of inefficient investment israre. This paper takes Richardson (2006) model as the foundation, and uses the dataof44“H+A” cross-listed companies to carry out the regression by means of LLC,Breitung, ADF and PP unit root test and other technique of panel data. According tothe results, the inefficient investment is calculated. The level of corporate governanceand the degree of non-efficiency investments are reversely related; therefore thisarticle adopts the non-efficiency investments as the proxy of corporate governance,and then compared the inefficient investment of2005-2009cross-listed companies byusing Wilcoxon signed rank test. Especially, I focus on whether the corporategovernance has improved after cross-listing. By making a statistical research on theintercept of individual company, this paper puts forward the concept of industrialspontaneous investment rate.Among the eighteen kinds of industries of the sample companies, auxiliarytransportation industry has the highest industrial spontaneous investment rate. PairedWilcoxon test results of five groups show that the level of the corporate governancedon’t improve significantly before and after3-4years of cross-listing, so the superhigh premium of return IPO can not be interpreted as the cost for cross-listedcompanies’ governance improvements, or reducing the information asymmetry.Finally, this paper undertook a further analysis of the real reason of “H+A”cross-listing’s super premium, and then puts forward some suggestions to protectinvestors.