Study On The Path Selection And Economic Consequences Of Luo Xin Pharmaceutical’s Return To A Shares

At the end of the 20 th century,due to the imperfect domestic capital market,some enterprises in need of financing chose to go to overseas capital market for listing,forming the trend of Chinese concept stocks going overseas for listing.Nowadays,after more than 30 years of development,China concept share enterprises have suffered frequent setbacks in the overseas capital market,coupled with the vigorous development of the domestic capital market in recent years,China concept share enterprises begin to review their own development needs and environment,and more and more China concept share enterprises begin to prepare for returning to the A-share market.In this paper,Luo Xin Pharmaceutical,A Chinese concept stock enterprise successfully delisted from Hong Kong capital market and successfully returned to A shares by backdoor,is selected as the research object.Based on information asymmetry theory,stakeholder theory,efficient market hypothesis theory and industrial life cycle theory,literature research method,case study method and event study method are adopted.This paper analyzes the process and motivation of enterprises delisting from the Hong Kong capital market and returning to the A-share market through backdoor listing,the reasons,risks and preventive measures for choosing backdoor listing,the short-term market reaction after the return,the long-term financial performance and non-financial performance of enterprises.The study of this paper will provide experience for other Chinese companies preparing to return,especially those planning to choose backdoor return.This paper firstly introduces the research background and significance,summarizes the research results of domestic and foreign scholars on the regression of Chinese concept shares,and then introduces the whole regression process of Luo Xin Pharmaceutical,and analyzes the reasons why enterprises choose to return to A shares,including the unsatisfied financing needs of enterprises,the low valuation level of Hong Kong shares and the better development prospects of the domestic capital market.Then it describes the reasons for Luoxin Pharmaceutical to choose backdoor listing,including saving listing time and cost and enhancing corporate visibility.In the process of listing,there may be payment risk,shell resource selection risk and high performance commitment risk.Finally,it analyzes the measures to avoid risk,including setting up merger fund,choosing appropriate shell resources and increasing R&D investment.For the study of the economic consequences after the return of Luo Xin Pharmaceutical,firstly,through the event study method,it is analyzed that investors in the capital market hold a positive attitude towards the backdoor listing.Secondly,the financial indicators of the listed enterprises are analyzed.The results show that the growth capacity and operation capacity of the enterprises are improved,but affected by the epidemic and related policies,they begin to decline in the second year after the return.Profitability decreases after listing,which is related to business integration and the increase of various costs in listing process.Short-term solvency improved,but long-term solvency did not improve,the financial risk is still high.Then,the non-financial performance was studied.After the return,the market value of Luoxin Pharmaceutical increased significantly,which led to the improvement of its brand value,the improvement of its financing environment and the enhancement of its financing ability.Finally,according to the research results,some countermeasures and suggestions are put forward for the quasi-regressive Chinese equity enterprises.