Under The Perspective Of Investor Protection Of Cross-listing And Inefficient Investment Research

With the trend of economic globalization and the development of financial market,motivation and desire of foreign companies to seek to cross-listing more and more intense.As a result,cross-listing generated finally, which is still in the ascendant, and become amajor topic of academic research. Foreign scholars had studied cross-listing for a long timeand had fruitful results about the cross-listing theories.With the deepening of research,scholars focus on the protection of investors more and more. In previous literatures, mostscholars focus on the impact of cross-listing to investors protection in sight of thedifferences of the inside and outside legal system. Therefore, based on the perspective ofinvestor protection, this paper consider the capital allocation behavior of enterprises, andthe differences of legal environment of companies before and after cross-list and its impacton corporate governance mechanism, to analysis the impact of cross-listing to companies`investment behavior.This paper also examine the effectiveness of cross-listing ongovernance, whether it effectively restrict the inefficient investment behavior ofcross-listed companies and improve the level of investors protection.Firstly, the author define cross-listing and small investors, and reviews the relevantresearch literature about cross-listing and inefficient investment. Then this paper comparethe governance mechanism between Hong Kong and mainland companies; then comparethe differences of legal environment between Hong Kong and mainland, and the impact ofthese differences on the governance mechanism; then, construct a mathematical model andpainting the indifference investment curve, observation the change of this curve before andafter cross-listing. Based on the above theories, this paper propose several researchhypothesis about cross-listed, such as cross-listing can effectively restrict enterprises`behavior of inefficient investment. This paper reference Vogt’s model(1994), get the resultsof regression analysis and prose some policy recommendations.The empirical results show that:(1) Cross-listing can effectively restrict theinefficiency investment behavior due to the controlling shareholders pursue of privatebenefits;(2) Investing-cash flow sensitivity of A+H cross-listed companies is lower thanthe A share companies;(3) A+H cross-listing can effectively restrict the enterprisebehavior of overinvestment;(4) With the increase of free cash flow, investing-cash flow sensitivity is growing; the degree of over-investment is also growing, also strengtheningthe restricting role of cross-listing;(5) With the increase of ownership concentration,sensitivity between investment spending and cash flow continue to lower, the degree ofover-investment is also getting smaller, and the restricting role of cross-listing toover-investment, not with increasing concentration of ownership presents some regularitychange.