Research On The Re-listing Of China Concept Stock Based On Backdoor Listing

The history of Chinese concept stocks' listing in the U.S.can be traced back to October 1992,when Huachen Automobile was listed on the New York Stock Exchange,which opened the prelude of CCS's listing in the U.S.However,while going to the United States for listing is very attractive,for many reasons,many Chinese concept stocks have chosen to delist and return to the mainland market.With the improvement of the domestic market,increasing policy support and the decline of the attractiveness of American market,the prospects for the CCS' relisting on domestic market have attracted more and more attention.At present,there are several ways for returning to the domestic market,such as IPO,backdoor listing,CDR and new three-board channel.There is a lot of difference between these four ways in main points,risks and the use of enterprises.Simply speaking,backdoor listing has the advantages of faster listing speed,looser requirements than IPO and higher market premium.Although there are some shortcomings,such as complexer scheme and high cost of shell costing,backdoor listing is still one of the main choices to return to the domestic market.The backdoor listing is more suitable for companies with the following characteristics: 1.Having a good capital base to bear the financial burden during the search for shell and the cost of purchasing shell companies;2.Having more urgent need for listing,hoping to be listed quickly;3.Having no need for financing for strategic integration;4.Being more suitable for small and medium-sized fast-developing enterprises.This paper takes Qihoo 360's backdoor listing as a case study,to explore the reasons for its delisting,the reasons for choosing the backdoor listing,and the effects after backdoor return.Qihoo 360 withdrew from NYSE on July 18,2016.On February 28,2018,Qihoo 360 officially returned to A-share market through backdoor listing.Qihoo 360's relisting not only increased the wealth accumulation of shell company,but also finished its own market value growth,financial condition optimization and business channel expansion.So Qihoo 360's backdoor listing is a win-win strategy between itself and shell company.For Qihoo 360,the main reasons for the final selection of backdoor listing are as follows: 1.backdoor listing can give Qihoo 360 a faster listing;2.backdoor listing can help Qihoo 360 get a higher market premium;3.backdoor listing can better maintain its internal stability;4.the business composition after adjustment can facilitate backdoor listing;5.Transaction of backdoor company tends to be rational.The paper finds that: 1.Among the four ways,backdoor listing has the advantages of faster speed,looser regulatory requirements and higher market premium.Although the CDR mode does not require delisting and does not need to dismantle the VIE framework,it seems more convenient and advantageous,but it is not suitable for the most companide because of its strict subject requirements.2.The market has a positive expectation of backdoor listing.Shell companies will get abnormal excess returns,and the financial situation of listing company will be optimized and obtain higher market valuation than the U.S.market.In view of the findings in the research process,this paper puts forward four suggestions: 1.The selection of relisting way of CCS should be combined with its own characteristics and needs;2.The selection of shell companies of CCS should be prudent and combination of control methods should be reasonable;3.The reaction of market to CCS should be rational;4.Regulators should improve the relevant policies as soon as possible.