The Empirical Study Of The B-share Discount In China Based On The Corporate Behavioral

In many emerging market countries, there exist market segmentation phenomenon, the problem of the price spread of common foreign shares and domestic shares. But China is the only one country whose foreign shares (B shares) with respect to the national domestic shares (A shares) manifest a substantial discount, since the birth of the B shares, "discount puzzle" has been the focus of academic research, especially after the 2001 when B shares market opened to the domestic residents, the research on the causes of the discount before and after the policies has not stopped, it raised liquidity hypothesis, differential demand hypothesis, differential risk hypothesis, asymmetric information hypothesis, and investor behavior hypothesis, etc.Based on the research literature from domestic and abroad, this thesis innovatively uses the sample data from 2001 to late 2014 which is the whole period after the opening market policy. As Lizhu’s repurchase of B shares is a symbolic event of this market, this thesis mainly research on the effects of corporate governance factors on the discount before and after 2008. After reviewing the development of the B-share market and the discount situation in recent years, find that B-share repurchase and delisting policy occur at times, after the announcement of the repurchase plan, the discount rate of listed B-share companies has dropped significantly. In addition, this thesis applies some statistical methods such as run test to analyze the current situation of B-share discount, and three basic conclusions drawn in that the marginal investor of B-share market are the Chinese investors after 2001, the differential investor between the two markets does not exist; there was no significant difference in the rate of return of A shares and B shares; there exists lag effect of B-shares discount rate, but the changes of discount is random.Based on the above statistical analysis and conclusion, this thesis has established a corporate governance factors as explanatory variables, different hypotheses factors as the control variable for explaining cross-sectional regression model in B-share discount rate, and in order to promote the explanatory extent, add an auto regression process and time dummy variables into the cross-sectional regression model, extend it into a panel regression model. The empirical results show that ownership concentration, board composition, corporate transparency, investor protection and dividend policy and other governance factors have significant relationship with the discount level, the worse management level is, the higher the discount rate would be. In terms of controlling factors, the asymmetry information, differential demand and differential risk hypotheses are significant the interpretation of the discount but liquidity hypothesis is not proved. While the repurchase of stocks have significantly reduced the discount rate, but because of the financial crisis in 2008, after the dual-listed public overall discount level higher than before 2008.Finally, in the inevitable trend that A-B market will be merged, the proposed regulatory authorities should be allowed dual-listed company to take "issue additional A shares, repurchase B shares " approach to achieve B-share delisting, a listed company on the one hand should actively improve the corporate governance structure to reduce discount level, on the other hand in the process of implementation should repurchase tender offer in terms of pricing mechanism and give full consideration to the cost and efficiency, smooth guide B shares delisted provide some reference for future research pathways and B-shares delisted issue discount.