Research On The Valuation Effects Of Overseas Companies’ Listing On The Host Markets

In the context of global economic interconnection,the competition among stock exchanges has become more intense,and various stock exchange markets have gradually joined the competition for listed companies.The general trend of the International Board opening.In recent years,China’s economy has developed rapidly and efficiently,but the Chinese securities market has not yet introduced foreign companies to list.Looking at the global securities market,most markets have introduced positive spillovers after the introduction of overseas companies listing.At the same time,there are also failure cases,such as Japan,Japanese economy developed rapidly during the initial stage of the launch of the International Board,and later,as a large number of overseas companies delisted from the Tokyo Stock Exchange,they failed.Therefore,what impact the opening of the International Board will have on the host market has become a research focus.In terms of the host market,firstly,this paper analyzes the factors affecting the valuation of overseas listed companies,then,studies the valuation impact of the company on the host market after listing,and in-depth study the valuation differences of different markets,and finally,the international market in China Board construction provides reference basis and policy recommendations.In terms of the company,what are the characteristics of a company with a higher valuation after being listed overseas? From the perspective of the host market,this article selects the U.S.market with a wide range of overseas companies and the Chinese Hong Kong market with a relatively single source(mainly Chinese?mainland)as the research objects,and uses the systematic GMM method to analyze overseas listed companies from home market characteristics and company characteristics.And further subdivide and examine the influencing factors of company duration differences and home market differences.The empirical results show that the home market’s economic development level,company size,and financial performance are the factors that affect the valuation of overseas companies,but young high-tech companies can obtain a significant valuation premium.In terms of duration,the longer the company’s existence,the lower the correlation between the company’s valuation and the economic development level of the home market,and the stronger the dependence on the host market,from the home market perspective,the valuation of overseas companies is significantly related to the level of economic development in the home market,the lower the correlation between the company’s valuation and the level of economic development of the home market,the stronger the dependence on the host market.In terms of the host market,the introduction of overseas companies to list is the primary decision to enhance market competitiveness,and the performance of companies after listing has become the key to market valuation.Classical theories indicate that short-term listing of overseas companies generates a valuation premium,but there is no consistent conclusion on the long-term valuation.In view of this,this article uses data from the US and Chinese Hong Kong markets from 1991 to 2018.At the market level,the event research method is used to analyze the short-term valuation impact,and the multiple linear regression model and the Tobin’q model are used to analyze the long-term valuation impact at the company level.From the short-term and long-term studies,the time-varying influence of the foreign companies listing on the host market valuation is different.The study found that the overall valuation impact of the overseas companies listing on the host market has changed over time.In the short term,the overseas companies listing has a short-term positive spillover valuation effect on the host marketm significantly,and the maturity of the host market is positively correlated with the short-term positive valuation spillover effect.In the long term,as the duration of overseas listed companies increases,the positive valuation spillover effect gradually fades,showing insignificant negative valuation spillover effects.The “quality contagion” hypothesis believes that the low-quality companies listing from emerging markets on the host market may increase market volatility and have a negative impact on the host’s existing listed companies,which “pollute” the quality of the host market,and have a negative spillover effect on the market valuation finally.The reputation rent-seeking hypothesis also believes that the emerging market companies listing may affect the quality of the host market and lower market valuations.Based on the long-term insignificant empirical results of the overseas companies listing,and considering the heterogeneity of different home market.From the market and company levels,and divide the source of listed companies into mature markets and emerging markets,we use multiple linear regression and Tobin’q model to further study the valuation differences due to the home market.The study found that there are significant valuation differences with the listing of foreign companies from different home market.The positive spillover effect of foreign companies from mature markets on the valuation is more significant,while the listing of overseas companies from emerging markets has a negative spillover effect on the host market.It shows that the spillover effect is closely related to the company’s different home market.Companies from emerging markets do have negative effects such as reputation rent-seeking and "quality contagion" effects,what’s more,the greater the difference in maturity between the host market and the home market markets,the greater the negative spillover valuation effect.The conclusions further enrich the valuation theory of companies listing,and also provide a reference for setting up the International Board in emerging markets in selecting company targets and home market.China,which has proposed the strategy of opening up capital markets under the “Belt and Road” initiative,and the concept of building an international financial center.This paper for China has the following suggestions: In terms of enhancing the valuation of the securities market,the economic development of the home market should be the focus of selecting overseas listed companies,and overseas companies from mature markets should be vigorously introduced for listing.For emerging markets,we can choose markets that are closely linked to China’s economic development,such as some markets along with the “Belt and Road”,to attract investors’ attention and increase market returns.The company’s age and scale should be re-examined and are closely related to the company’s industry.Although company valuation has economies of scale,smaller companies may be more flexible in market valuation due to greater flexibility.In terms of governance of listed company,the securities market should increase the management of listed companies and formulate regulatory policies to regulate the behavior of operators,and enhance the market value of listed companies and the persistence of premiums.Therefore,as long as we choose right companies to list in Chinese market,also strengthen market supervision,this will bring obvious benefits to the Chinese capital market,and the opening of the International Board is just around the corner.