Research On The Reason Of Going Private And The Effect Of A-share Listedof Chinese Overseas Listed Companies

In 2015,more than 30 U.S.listed Chinese companies announced to go private.Since then,it has become an upsurge of China concept stocks.Focus Media was a listed media company on the NASDAQ Stock Market.But it announced to go private,reverse merged HEDY holding and returned back to domestic capital market,the case of Focus Media backdoor HEDY holding listed is significant in Chinese stock market.Therefore,Focus Media has integrated research elements: public-private-public.This paper,on the basis of summarizing the related literature,based on the theories of underestimation of market value,free cash flow,transaction cost theory,tax saving theory and control theory,and combined with actual situation,analyzes the typical case of Focus Media.Then with event study methodology,simulate the actual income rate(AR)and the cumulative abnormal return are two indicators to measure price transaction due to this event.At last,use accounting index method to evaluate the performance of Focus Media after backdoor listing,verify whether the backdoor listing has a positive impact on all aspects of the company's capabilities.The results of this paper show that:(1)the main motive of privatization is to the enterprise market value is significantly undervalued,reduce free cash flow to reduce agency costs,there are also for tax savings,centralized control,and reduce the cost of listing considerations;(2)Focus Media backdoor HEDY holding fact of backdoor listing has a significant effect for the price of HEDY stock;(3)Focus Media backdoor HEDY holding is very successful,company's solvency,profitability,operating capacity and development capabilities have a certain degree of promotion.By analyzing the motivations and effect analysis of Focus Media's privatization and relisting,for other companies to return to the stock market to provide reference.Based on the above paper results,it is suggested that the China concept stock companies should proceed from their own realities and rationally look at the issues of listing and delisting,measure the corresponding risk in the regression process adequately,weigh the cost and income of delisting and re listing,and then make appropriate decisions.At the same time,it is suggested that the government supervision departments should constantly improve the corresponding mechanism and guide the return of high-quality China concept stock companies.