Research On The Motivation And Financing Efficiency Of A Shares And H Shares Of Zhejiang Shibao

Companies are increasingly demanding large amount of capital with the rise of GDP of China and many of them choose to initiate IPOs in mainland China and abroad simultaneously to maximize the reputation of their brands.As an inte rnational financial centre,Hong Kong is always preferred by mainland local companies.On June 7th,1993,Tsingtao Brewery issued H-shares on the Hongkong stock exchange,becoming the first Chinese company listed overseas.On August 27 th of the same year,Tsingtao Brewery issued A shares on the Shanghai stock exchange.It became the first H-share company which return to the mainland to turn to be cross listing in China.Immediately,Guangzhou Shipyard International and Sinopec Shanghai Petrochemical were the same as Tsingtao Brewery which became cross listed.Since then,cross-listing become the one of the method to finance for Chinese mainland companies due to a series of government policy implementation..By 31 st December 2017,98 mainland companies which are totally or partially state-owned initiated their IPOs both in home and in Hong Kong.Mainland stock market is more likely to provide share premiums than is Hong Kong market and cross-border listing has influence on companies themselves.Consequently,a deep research on cross listing from various perspectives is necessary for both companies and authorities when it comes to achieve financing goals,to reinforce competitiveness for companies and to consolidate mainland stock markets for governments.Empirical evidence from Zhejiang Shibao Company Limited helps explain three motives of its cross listing.Firstly,The company was suffering from insufficient production capacity before IPO.Moreover,Refinancing is less likely in H-shares than in A-shares and the high earnings ratio of A-shares is benefical to finance.This research divides company’s history into three major stages which are IPO in Hong Kong in 2006,cross-listing in 2012 and private placement in A-shares market in 2014.The outcomes of cross-border listing are investigated through analyzing the direct effect of this three-stage offering,fluctuation of financial ratios and influence on share price in the long run.Direct effect of three-stage offering is described by completion of products,production capacity,product price,cost and gross margin.Financial ratios are selected in accordance with four major perspectives including profitability,debt paying capacity,operation and growth.Cumulative abnormal return(CAR)is employed to reflect the impact of cross-listing on long-term share price.Results indicate that cross listing does not have significant influence on the situation of Zhejiang Shibao.