The Relationship between Corporate Governance and Performance of Cross-listing Companies-Evidence from Shanghai, Shenzhen and Hong Kong Markets

• Main Authors: I-Ting Lin, 林怡廷
• Other Authors: Yi-Pei Chen
• Format: Others
• Language: zh-TW
• Published: 2013
• Online Access: http://ndltd.ncl.edu.tw/handle/34395729110498179102

碩士 === 中原大學 === 企業管理研究所 === 101 === This study assumes cross-listing strategy is an essential reference to demonstrate the performance of a company’s corporate governances (CG). Investors may realize the growth possibilities of a specific company based on its performance of CG. The advantage of cross-listing companies includes attracting foreign investors, expanding market scale, raising capital, increasing operational developments, strengthening its CG performance and improving company’s operational system. Furthermore, the stock markets developed a CG indicator to measure the impact of CG on a company’s performance. Coffee (2009) and Black (2001) argued that the foreign firms engaged in cross-listing would improve their corporate governance which is known as the “bonding hypothesis”. However, Licht (2003, 2004) argued that the key weakness in the basic bonding theory was that it linked the interests of issuers with those of insiders in decision-making positions. This study attempts to examine whether cross-listing companies improve their corporate governance and whether cross-listing companies outperform non cross-listing companies. The experimental groups of this investigation, “A+H” stocks are publicly listed in the three markets; while the control group, “A” stocks are only publicly listed in Shanghai and Shenzhen markets. Return on assets representing company’s performance is used as a dependent variable; while CG variables are employed as independent variables. This investigation uses Univariate analysis to distinguish the mutual impacts among variables. This study then employs the OLS, Logit regression and Tobit regression tests to compare the performance of cross-listing companies and that of non cross-listing companies. Finally, Robustness test is used to determine the stability and consistency of all the results. This study further divides the sample period into two sub-periods as follows: the first sub-period runs from 2003 to 2004, and the second sub-period runs from 2007 to 2011 since there is a stock market’s reformation occurred in China during the period of 2005 to 2006. Empirical results indicate that the relationship among explanatory variables are consistent before and after the stock reformation period. The findings also show that the company’s CG has positively significant relationship with its performance. However, there is a negatively significant relationship between company’s CG and its performances for the cross-listing companies. Licht (2004) also argued that “there is no reason to assume a priori that cross-listing would entail an improvement in issuer’s corporate governance.” The possible explanation of our finding is that there are different market reformations, different legal requirements and different restrictions between stock markets. This result confirms with the findings of Licht (2003 and 2004), Licht (2004) argued that, in reality, cross-listing may be pursued issuers, for a number of good reasons, but corporate governance self-improvement apparently is not among them, issuers may actually be avoiding rather than bonding better governance. This study also finds that cross-listing companies have better performance after stock reformation than before.