Research On The Departure System Of Chinese Listed Companies

Chinese security market has been developed for almost14years, however, theimplementation effect of Chinese delisting system was not so satisfactory. Asignificant number of poor companies which could not meet the requirements ofcontinuing listing in world advanced security market refuse to delisting from Chinesesecurity market. How to explain this unique phenomenon and how to enhance theeffectiveness of Chinese delisting mechanism and to establish a state of “survival ofthe fittest” in Chinese security market has an important significance in furtherdevelopment of Chinese security market.There were five parts in this thesis. Part one was introduction of the whole thesis.Part two focused on the evolution of delisting system, delisting procedures anddelisting standards. Part three did an empirical analysis on three kinds of stocks: thedelisted stocks, being special treatment stocks and abrogated special treatment stocks.The purpose of doing empirical research on all special treatment stocks was to studythe implementation effect of China’s delisting system. The results showed that listedcompanies being punished mainly are due to lack of liquidity, and eventually leadingto the decline in profitability. However, these companies are not bankrupt. They areonly temporarily in trouble and they will recovery if enough time is given. But manycompanies are so desperate to get rid of the “ST” label after being punished thatvariety of means have been used to circumvent being delisted. And there are somecompanies which get listed in security markets by fraud to obtain scarce resources inthe markets. And these companies showed no sign of improvements after they listed.Also, Logistic regression analysis showed that most of the ST companies applyearnings management to get rid of the “ST” label and the most significant subjectthese companies regulate in earnings management is non-recurring profit and lossitems in order to manage earnings. And the ROA mean analysis showed that thosecompanies which successfully get rid of “ST” label showed no sign of improvementsafter the year they are being avoid delisted. Part four focused on the compare ofdelisting system between the foreign delisting system and Chinese delisting system.The results showed Chinese numerical delisting standards are not sufficient when compared to foreign advanced delisting system, and the non-numerical standardswere inoperable and covered with limited scope. Part five, based on the aboveanalysis, gave some suggestions on how to improve the implementation effect ofChina’s delisting system.