A Study On The Inluencing Factors Of Chinese Concept Stock’s Delisting From U.S. Exchanges

The Chinese Companies began to list on the U.S. capital market from early1990s, since when fivelisting upsurges towards U.S. have happened. However, after2011, the Chinese Concept Stock sufferedits first delisting upsurge of90delistings, which is8.6times of that happened in past20years. Exceptfor large numbers of involuntary delisting companies, there were also many excellent companies choseto go private by delisting voluntarily, which has brought great loss to both the investors and thereputation of Chinese Concept Stocks. This paper initially combines the qualitative and quantitativemethods, and compares the voluntary and involuntary delistings. Focused on the stock marketperformances of the Chinese Concept Stock on U.S. market, this paper systematically analyzeinfluencing factors of Chinese Concept Stock’s delisting from U.S. Exchanges from1990-2013, anddeeply study on the reasons behind the first delisting upsurge between2011and2013. Learning from theexisting analysis, this paper firstly analyzes the internal and external factors of the voluntary andinvoluntary delistings, and then it uses several comparisons, including the comparison of different listingperiods, different delisting types, listing characteristics and delisting characteristics as well as voluntarydelisted Chinese Concept Stocks and matched U.S. Stocks, to deeply study the delisting factors. Finally,the multivariate LOGIT Model is also built to check the significances of the six factors consisted ofCompany Quality, Internal Control, Undervaluation, Market Competition, U.S. Exchanges, and ChineseEconomics. Based on the all analyses and findings, it is concluded that weak Chinese SMEs tend todelist involuntarily and strong Chinese companies with higher free cash flow are more likely to choosedelist voluntarily. And other four external factors, undervaluation, intense competition, weak U.S. stockmarket as well as slow Chinese economics, are all proved to significantly increase the probability ofChinese Concept Stock delisting from U.S. Exchanges.Since the listing upsurges turned into delisting upsurge, importance should be highly attached to whyChinese Concept Stock delist from U.S. Exchanges. Based on the findings and conclusions of this paper,it is suggested that Chinese companies who want to list should get familiar with the rules and regulationsof U.S. Exchanges as well as their real strengths, and regain confidence and recharge batteries. Forinvestors, they need to change their old view on Chinese Concept Stocks, and distinguish the good onesand weak ones in order to make a right investment. Only in this way can both sides achieve double-wins.