The Governance and Performance of Chinese Companies Listed Abroad: An Analysis of China’s Merits Review Approach to Overseas Listings

Journal of Corporate Law Studies, 2012, Vol. 12, No. 2, pp. 333-365

UNSW Australian School of Business Research Paper No. 2012 BFIN 06

33 Pages Posted: 4 Apr 2012 Last revised: 1 Apr 2014

Mark Humphery-Jenner

UNSW Business School; Financial Research Network (FIRN)

Date Written: 2012

Abstract

Chinese companies that are listed in the US have received scrutiny on the supposition that they have poor corporate governance and have engaged in accounting malfeasance. However, this seems anomalous given that China has recently strengthened its corporate governance practices and imposes a merits review test on to determine if a Chinese company can issue shares abroad. This begs the question: are Chinese companies worse governed than are other companies in the US? I test this issue by comparing Chinese companies listed in the US with other US companies and with other non-US companies that list in the US. I find that Chinese companies do not have demonstrably worse governance characteristics, have lower levels of earnings management, have stronger operating results and are less likely to delist from the US market. This suggests that the CSRC has effectively screened international listings by Chinese companies and supports the current regulatory system.

Keywords: Management Quality, Governance, Signaling, Initial Public Offering, Information Asymmetry, ADRs

Suggested Citation

Humphery-Jenner, Mark, The Governance and Performance of Chinese Companies Listed Abroad: An Analysis of China’s Merits Review Approach to Overseas Listings (2012). Journal of Corporate Law Studies, 2012, Vol. 12, No. 2, pp. 333-365; UNSW Australian School of Business Research Paper No. 2012 BFIN 06. Available at SSRN: https://ssrn.com/abstract=2034263

Mark Humphery-Jenner (Contact Author)

UNSW Business School ( email )

Sydney, NSW 2052
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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