Analysis On The Contributory Factors Of The Delisting Of Chinese Concept Stocks

Since landing in the US capital market in the 1990 s,Chinese concept stocks have experienced rapid growth during the first decade of the 21 st century.They have also experienced severe winter between 2010 and 2013 when questioned by financial falsifications.Recently(since the end of 2013),with the successful IPOs of high-quality companies like Alibaba and JD in American stock market,Chinese concept stocks in the US have ushered in a new era: that is,unlike the early 21 st century when listing was usual and delisting was rare.Nor the gloomy days between 2010 and 2013,when many Chinese concept stocks was doubted and delisted.In this new period,the privatization of Chinese concept stocks began to become as normal as the listing of Chinese concept stocks.However,the privatization of companies is obviously less concerned about.It means that the capital market may lack a comprehensive and accurate view over these delisted stocks and companies,which may jeopardize both the firms and the market.This paper aims at justifying the intrinsic mechanisms that result in the privatization decision of firms.We employ the method of data comparison analysis to investigate the differences in the aspects of valuation,agency cost,transaction cost,market environment and trend factors between companies who declared the decision of privatization and companies who not yet declared the decision.Then we get preliminary recognition of the features of privatization of enterprises.Later,we further employ the method of Logit model to quantitatively analyze the factors that affect the decision-making of privatization of enterprises,and find that:(1)The adjusted free cash flow is positively related to the possibility of privatization of enterprises.(2)The scale of enterprises is negatively related.(3)The difference between the PE ratio of the Chinese and US markets and the difference in growth of the Chinese and US markets are positively related.(4)The ratio of the increase in stakeholder's equity to the growth in sales is negatively related.Afterwards,based on the results this article proposes suggestions to investors on what attitude they should take to the privatization of Chinese concept stocks,to firm managers on how the can make rational privatization decisions,and to the construction of China's multi-level capital market on how they can improve the market better.