On the Decision of Public Companies to seek Foreign Listings: The Case of Chinese Companies.

Abstract

This thesis looks at the determinant factors to the Initial Public Offering (IPO) location choice of Chinese firms, in particular, the choice between the Singapore market and the market in Hong Kong or in mainland China.We find that firms with better financial performance or corporate governance prefer to have IPOs in Singapore than Chinese domestic markets to separate themselves from the rest as a quality signal to capital markets and product markets. However, findings on the effects of financial performance on the choice between Singapore and Hong Kong are contrary with conventional expectations. Industry sector, tax burden and firm size also affect the decision. External effects from the market performance seem not important. Lastly, all testable variables fail to explain the location preferences among the NASDAQ-type exchanges.Post-IPO financial performances are also examined, providing information on whether firms have achieved their perceived benefits from IPOs on a particular market.