The Consequences of Allowing Home Country Auditors to Audit Cross-listed Firms: Evidence from Hong Kong-listed H Share Firms

2020 ◽  
Author(s):  
Manyi Fan ◽  
Bin Ke ◽  
Wenruo Wu ◽  
Lijun Xia ◽  
Qingquan Xin
Keyword(s):  
Hong Kong ◽  
Home Country ◽  
Listed Firms ◽  
H Share

US ADR and Hong Kong H-share discounts of Shanghai-listed firms

2008 ◽  
Vol 32 (9) ◽  
pp. 1916-1927 ◽  
Author(s):  
Gregory C. Arquette ◽  
William O. Brown ◽  
Richard C.K. Burdekin
Keyword(s):  
Hong Kong ◽  
Listed Firms ◽  
H Share

Cross-Listing Audit Fee Premiums: Theory and Evidence

2009 ◽  
Vol 84 (5) ◽  
pp. 1429-1463 ◽  
Author(s):  
Jong-Hag Choi ◽  
Jeong-Bon Kim ◽  
Xiaohong Liu ◽  
Dan A. Simunic
Keyword(s):  
Home Country ◽  
Audit Fees ◽  
Legal Liability ◽  
Listed Firms ◽  
Cross Listing ◽  
Audit Fee ◽  
Legal Regimes ◽  
Cross Country ◽  
The Cross ◽  
The Difference

ABSTRACT: We study the effects of cross-listings on audit fees. We first develop a model in which legal environments play a crucial role in determining the auditor's legal liability. Our model and analysis predict that auditors charge higher fees for firms that are cross-listed in countries with stronger legal regimes than they do for non-cross-listed firms and that the cross-listing audit fee premium increases with the difference in the strength of legal regimes between the cross-listed foreign country and the home country. We then empirically test these predictions. The results of our cross-country regressions strongly support our predictions. In addition, we find no significant cross-listing fee premium for firms that are cross-listed in countries whose legal regimes are. no stronger than those of their home countries. This suggests that cross-listing audit fee premiums are associated with increased legal liability and not with increased audit complexity per se. Our findings help explain why cross-listing premiums occur and what determines their magnitude.

Mitigating Negative Spillovers from Categorization of Foreign-Listed Firms: The Role of Host-Country Independent Directors

2019 ◽  
Vol 15 (4) ◽  
pp. 773-807
Author(s):  
Eugene Kang ◽  
Asda Chintakananda
Keyword(s):  
Financial Reporting ◽  
Host Country ◽  
Home Country ◽  
Stock Exchange ◽  
Spillover Effects ◽  
Independent Directors ◽  
Fiduciary Duties ◽  
Listed Firms ◽  
Or Task

ABSTRACTThis study examines how cognitive categorization by host-country investors give rise to negative spillovers among host-country foreign-listed firms from the same home country when one of these foreign-listed firms discloses a financial reporting irregularity. This study further examines how attributes of host-country independent directors mitigate such negative spillover effects through signaling fulfilment of their fiduciary duties. Our results based on Chinese foreign-listed firms on the Singapore Stock Exchange from 2007–2014 reveal that host-country independent directors increase spillover effects among foreign-listed Chinese firms from financial reporting irregularities. However, such increase is attenuated when these directors signal fulfilment of their fiduciary duties through home-country, industry, or task-related experiences, and the observed mitigating effect is stronger when they possess a combination of these experiences.

A Survey on Capital Structure Decisions of Hong Kong Firms

2000 ◽  
Vol 03 (03) ◽  
pp. 347-365 ◽  
Author(s):  
Dennis K. K. Fan ◽  
Raymond W. So
Keyword(s):  
Hong Kong ◽  
Capital Structure ◽  
Information Asymmetry ◽  
Firm Size ◽  
Pecking Order ◽  
Listed Firms ◽  
Financing Decisions

In this paper, the results of a survey on capital structure decisions of Hong Kong listed firms are reported. It is found that Hong Kong firms conformed more to the "pecking order" principle than a target long term debt-equity mix in their financing decisions. Financial managers' preferences over alternative capital raising instruments are also investigated. The degree of information asymmetry and firm size are found to have impacts on the ranking of some factors governing capital structure decisions. However, signaling motivation does not play a role in managers' financing decisions.

Short sales and price discovery of Chinese cross-listed firms

2016 ◽  
Vol 12 (4) ◽  
pp. 408-421 ◽  
Author(s):  
Jun Chen ◽  
Alireza Tourani-Rad ◽  
Ronghua Yi
Keyword(s):  
Adverse Selection ◽  
Price Discovery ◽  
Short Selling ◽  
Chinese Firms ◽  
Content Type ◽  
Listed Firms ◽  
Significant Difference ◽  
The Impact ◽  
A Share ◽  
H Share

Purpose – The purpose of this paper is to investigate the impact of short selling and margin trading on the price discovery and price informativeness of cross-listed firms, using a sample of Chinese firms listed on the China and Hong Kong stock exchanges. Design/methodology/approach – The sample consists of 67 Chinese cross-listed firms on A-share and H-share markets out of which 18 firms are allowed to be sold short/ traded on margin since March 2010. Using pre- and post-event period, the authors compare and contrast various market microstructure variables. The contributions of the home (A-share) and overseas (H-share) markets to the incorporation of new information into prices are calculated following the permanent-transitory approach of Gonzalo and Granger (1995) as well as the adverse selection component of Lin et al. (1995). Findings – The findings indicate that for the group of Chinese cross-listed firms that are not allowed to be sold short or bought on margin, the home (A-share) market contributes more to the price discovery process over time. However, for the group of cross-listed firms that are eligible for short selling and margin trading, the authors observe no significant difference in the contribution of either A- or H-share markets to the price discovery. The contribution of home market for these firms is even lower around the announcement of major events. The authors further find that while the short sale activities appears to be informative, measured by the adverse selection (AS) component of spread, on the whole they have not led the A-share markets to be more informative. Research limitations/implications – The sample of cross-listed Chinese firms that are allowed to be sold short or bought on margin are rather limited. Hence, the results should be read with some caution. Practical implications – The removal of short selling constraints appears to improve the contribution of the respective markets to the process price discovery, in the case for larger cross-listed firms. Originality/value – The authors shed new lights on how the introduction of short selling and margin trading impacts on the price discovery of the Chinese cross-listed firms. A further contribution of the study is the use of high frequency data, while most of the previous studies on the Chinese markets use daily data.

Preparing Opium for America: Hong Kong and Cultural Consumption in the Chinese Diaspora

2005 ◽  
Vol 1 (1) ◽  
pp. 16-42 ◽  
Author(s):  
Elizabeth Sinn
Keyword(s):  
Hong Kong ◽  
New Zealand ◽  
Social Values ◽  
Home Country ◽  
Gold Rush ◽  
Chinese Diaspora ◽  
Export Trade ◽  
Cultural Consumption ◽  
Long Distance ◽  
The Government

AbstractThis article studies how emigrants' consumption, conditioned by social values and taste transplanted from the home country, affected long distance trade. As tens of thousands of Chinese went to North America, Australia and New Zealand from the time of the Gold Rush, a market for Chinese consumption goods arose, with prepared opium being a leading commodity. Chinese, both at home and abroad, consumed opium by smoking and demanded opium to be boiled in a particular way. As brands prepared in Hong Kong were widely acknowledged as the best, the export trade in Hong Kong's opium to these high-end markets became extremely lucrative. Producers elsewhere resorted to different ploys to get a Hong Kong stamp on their products. The Hong Kong government manipulated different groups of Chinese merchants inside and outside Hong Kong to maximize its revenue from the opium farm, while rival merchant groups sometimes combined to trump the government. The situation not only offers a lesson for the study of state-business relations but also undermines the popular claim that the Hong Kong government practiced laissez-fairism. On another level, the study, by highlighting the consumption of one particular commodity, draws attention to the Chinese diaspora as transnational cultural space.

The Impact of Eliminating the Form 20-F Reconciliation on Shareholder Wealth: Evidence from U.S. Cross-Listed Firms

2014 ◽  
Vol 90 (1) ◽  
pp. 199-228 ◽  
Author(s):  
Lucy Huajing Chen ◽  
Inder K. Khurana
Keyword(s):  
Financial Reporting ◽  
Home Country ◽  
Control Sample ◽  
Abnormal Returns ◽  
Shareholder Wealth ◽  
Information Loss ◽  
Data Availability ◽  
Wealth Effects ◽  
Listed Firms ◽  
The Impact

ABSTRACT This paper examines shareholder wealth effects in U.S. and home-country markets relating to the Securities and Exchange Commission's (SEC) decision to eliminate the Form 20-F reconciliation. During the period of examined events, we find positive cumulative abnormal returns for the treatment sample of U.S. cross-listed firms that prepare financial statements under International Financial Reporting Standards (IFRS), but no such effects for our control sample comprising cross-listed non-IFRS, U.S. domestic, or home-country firms. We find the stock market impact for our treatment sample to be positively related to our proxy for cost savings and negatively related to the pre-adoption reconciliation magnitude from IFRS to U.S. GAAP. This suggests shareholders place some value on reconciliation information, but the costs of preparing and auditing reconciliations generally outweigh concern about information loss. Moreover, we find that information loss is less pronounced for firms having used IFRS for a longer period, suggesting the learning effect mitigates information loss. Data Availability: Data are publicly available from sources identified in the article.

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