The Impact Of GDR Issuance On The Earnings Quality Of Listed Companies

The official launch of the "Shanghai-London Stock Connect" is another landmark and important move for China's capital market.The global depository receipt(GDR)of its westbound business listed on the London Stock Exchange can be listed and traded independently of the underlying securities.After the issuance,there is a 120-day redemption limit period,which can be converted into A shares after the limit period expires.On the one hand,enterprises can enter the overseas capital market through the issuance of GDR,and raise funds from all parts of the world;on the other hand,it is also helpful to expand the company's global popularity.However,under the interconnected trading mechanism,what kind of changes will the company 's shareholding structure result from the issuance of GDR,can the company 's governance structure be optimized,and will speculative trading be triggered by differences in the valuation of the Shanghai and London stock markets? Decreasing the quality of surplus is of great significance.Therefore,the research question of this article is raised: how will the issue of GDR affect the earnings quality of listed companies.The research status of this article: A large number of domestic literatures are all about B,H,QFII,RQFII,"Shanghai-Hong Kong Stock Connect","Shenzhen-Hong Kong Stock Connect" influences.As for the perfect mechanism launched by the market based on interconnection-"Shanghai-London Connect",few scholars are currently concerned.There are no empirical and case studies related to GDR under the "Shanghai-London Connect" mechanism in domestic literature.The innovations of this article are:(1)contributing a research result on GDR;(2)contributing to the economic consequences after GDR issuance;(3)cutting into the factors that affect the company's earnings quality from a new perspective,It provides an effective supplement to the research related to earnings quality and earnings management.Research ideas and research methods: This article adopts a case study method,taking the company that has successfully issued GDR and passed the redemption test as the research subject,based on agency issues,information asymmetry and the theory of stakeholders,cut from the event From the perspective of China 's A-share listed company 's changes in shareholding structure after GDR issuance,and speculative trading,whether corporate governance has been improved is analyzed,and further from the perspective of earnings reliability,earnings structure and earnings sustainability.This paper analyzes whether the company's earnings quality has declined.The research objectives and research findings are as follows:(1)The company's shareholding concentration is reduced,the shareholding balance is reduced,the controlling shareholders are not constrained by other shareholders,the company's governance structure is not optimized,and the effectiveness of the checks and balances of the controlling shareholders is reduced;(2)After the company issued GDR,speculative arbitrage transactions occurred,and the stock price fell;(3)the company's performance after the GDR issuance decreased compared with before the issuance;(4)the company's externally reported earnings quality after the GDR was issued.Research value and practical implications: Huatai Securities,as the first A-share listed company to issue GDR,the impact of the GDR issue on the company 's shareholding structure,market transactions and earnings management will have reference and enlightenment for the listed companies that plan to issue GDR in the future.This article can help investors understand the reasons for the stock price crash and provide inspiration for regulators to implement supervision on such listed companies.