Cross-listing Reduce Agency Cost Analysis

In the 1980 s, with the development of economy, the progress of science and technology, and friendly exchanges among countries is more and more frequent,countries gradually relax restrictions on capital flows, the enterprise competition also tends to globalization, the enterprise in order to obtain financing for growth, investors in order to get a higher return on investment, cross-listing a new way of realization of international capital flows on the market came into being that meet the enterprise and investors’ demands. In China, since 1993 Qingdao beer realized the listed in Hong Kong, which open the cross-listing prelude in our country, more and more enterprises choose cross-listings meet their own needs. Compared with the western theory, follow the direction of economic development, the early study of cross-listing, set up many of cross-listings influence agency cost theory, the domestic scholars on cross-listing starts late,the study about how cross-listings affect three kinds of agent cost is not yet mature. In this context, this paper selected companies which in the 2011-2013 has been cross-listings in Hong Kong and mainland capital market, as well as companies which in 2011-2013 listed in the mainland only, in-depth analysis the mechanism that the cross-listing reducing three kinds of agency costs, the reason is when listed companies in mainland China go on listed in Hong Kong capital market to realize cross-listing,the Hong Kong market’s strict laws and regulations of the constraints, the enterprise gradually attaches great importance to the interests of small and medium-sized investors would restraint insider controllers’ behavior,because the insider controllers in order to meet the strict requirement of the information disclosure in the securities market, the enterprise would improve the quality of information disclosure and compared to mainland market in certain extent, reduce the information asymmetry of external stakeholders such as creditors, it also can reduce the occurrence of debt agency cost, and listed on the Hong Kong market, the government supervision and external supervision strength significantly strengthened, the managers and shareholders in order to avoid to grab the behavior of the interests of others is perceived, will reduce the embezzlement, so then A big shareholder agency costs for the enterprise managers and agency cost is reduced. In the empirical analysis part, the author using three agency cost model to empirical analysis, the results also confirmed that China’s enterprises to Hong Kong that live up to cross-listings, can reduce thethree kinds of agency costs, and the author proposed that our country securities management department to study that international excellent specification, the mainland capital market will step by step develop into the developed capital market,and also puts forward some Suggestions for companies that want to realize cross-listing, hope its make use of cross-listings then improve their management, thus enhancing the competitiveness of Chinese enterprises in overseas, set an example for Chinese companies to list overseas.