Time: Thursday, March 23rd 16:00-17:00

Venue: Tencent Conference 133-540-594

Topic: Costs of Capital Market Policy Distortions: Evidence from Overseas Listed Chinese Companies

Speaker Introduction: YUAN Mengying, PhD in Economics, Singapore Nanyang Technological University. Research direction: Corporate Finance.

Organizer: Bay Area International Business School, Beijing Normal University

Report Content:

By the end of 2020, approximately 1,600 Chinese companies with a total market capitalization of $5.3 trillion will be listed on stock exchanges outside of mainland China. This paper examines the motivations and market valuations of Chinese firms listed overseas, and how they are affected by policy distortions in China's capital markets. Using an endogenous treatment effect model, we find that, contrary to the valuation premiums commonly found in the literature for overseas-listed firms, Chinese firms listed on the U.S. and Hong Kong stock markets have a 50% valuation impairment compared to domestically listed firms , and this effect persists even five years after listing. Using exogenous policy changes and shocks and firm heterogeneity, we examine the impact of three policy distortions on this valuation impairment. These three policy distortions include restrictions on foreign investment, an administrative approval system for IPOs, and capital outflow controls. We find that affected by these three policy distortions, overseas-listed Chinese companies face greater valuation discounts.