Research On Influencing Factors Of Price Differences Between Domestic And Foreign Shares About A And H Dual Listing Companies

With the rise of our country’s economic output, the enterprises are facing hugefinancing needs. Many enterprises broaden the financing channels, expand theinfluence of their own brand by the way of being listed in both the mainland andoverseas. As the international financial center, Hong Kong is favored by ourdomestic enterprises. By the end of2011, there are69enterprises being listed inboth Hong Kong and mainland. Their A-shares are prevalently at a premiumcompared with H-shares, but in recent years some companies have shown a newphenomenon that A-share is at a discount. As the differences of the price ofdomestic and foreign stocks have significant impact on the stability of capitalmarkets and corporate financing effect, so multi-angle study of the factors thatinfluence the price differences of A and H shares in the new economic situation hasa strong necessity. It has a strong practical significance for government departmentto improve the capital market, for the investor to establish a correct concept and forthe enterprises to realize their aim of financing.Firstly, this paper summarizes the theory about the differences of stock price byreading the extensive literature, which provides theoretical support for the nextresearch. Then the paper analyzes the status quo of A-share premium in detail fromthe view of whole, interval and industry point. We find that many enterprises presentinversion phenomenon in recent years, financial industries are in the lowestpremium rate. After the analysis of the status of cross-listed companies’ A-sharepremium, the paper studies influencing factor deeper from two aspects. On the onehand, it’s based on the hypothesis, selects the relevant variables, finds that liquidity,investment philosophy, as well as the elasticity of demand have significant impactfor the existence of price. On the other hand, it’s based on the corporate governanceperspective, the paper introduces variables such as independent directors’ ratio andthe stock ratio that held by the largest shareholder, we find the stake of institutionalinvestors has a negative relationship with the premium level of A-shares, the stakeof the largest shareholder has a positive impact, the ratio of independent directorsand the stake of the second largest to tenth largest shareholder have no significantimpact on it. Finally, the paper gives some relevant policy recommendations basedon the results.