Study On The Path And Practice Of Red-Chip Enterprise Landing SSE STAR MARKET By Issuing CDR

At the beginning of China’s capital market,due to Variable Interest Entities,weighted-voting rights structure,etc.,many new economy enterprises could not meet the requirements for domestic financing and listing on the overseas capital markets.At the advent of the US seeking to unhook with China,the financing activities of red-chip enterprises in the US is strictly restrained.Considering the tighter regulatory policies of American Stock Exchanges and the continuous improvement of domestic capital market,red-chip enterprises tend to return domestic capital market,With China’s economic development into a high-quality stage,our government has innovated financial instrument by set up China Depositary Receipt to attract high-quality red-chip enterprises to return.Among them,with the structure of Variable Interest Entities,unlisted Company No.9successfully issued CDR to landed SSE STAR MARKET on October 29 th,2020.As the first red-chip enterprise that successfully issued CDR,its success is unique and representative,which can be referenced for other red-chip enterprises that return to domestic capital market in the future.This paper analyzes the case of Company No.9 with relevant theories and case study methods based on the related researches,by study on the process of Company No.9 issuing CDR,and analyzes its motivation,conditions for success and the selection of path.Then,it adopts the methods of event study and financial performance analysis to study the influence of Company No.9 issuing CDR on short-term market reaction and corporate financial performance.The conclusions are as follows: First,The return of Company No.9is influenced by regulatory policies,financing demand,support from industrial policy,enterprise valuation and listing cost,etc.Second,Company No.9 meets the requirements of SSE STAR MARKET’s industry positioning and profit index,so,it’s suitable for landing SSE STAR MARKET.The separation of VIE structure by Red-chip enterprises will generate huge economic cost,control risk,tax risk and operational risk.For Company No.9’s weak cash flow and rapid development,it is a suitable choice to keep VIE structure;Third,the improvement of institutional condition,market environment and internal governance condition of Company No.9 is the reason for success;Fourth,to a certain extent,Company No.9 landing SSE STAR MARKET has promoted its short-term market and financial performance.At last,according to the above research conclusions,give some advice from three aspects: red-chip enterprises planning to return domestic capital market,the path of red-chip enterprise’s selection and CDR issuance system.