IS A US IPO A SENSIBLE OPTION FOR ASIAN VENTURES?

David Y Choi, Susan Elkinawy and Stacey H Wang
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David Y Choi: College of Business Administration, Loyola Marymount University, USA
Susan Elkinawy: College of Business Administration, Loyola Marymount University, USA
Stacey H Wang: Attorney at Law, USA

Journal of Enterprising Culture (JEC), 2007, vol. 15, issue 02, 187-211

Abstract: U.S.-based stock exchanges (e.g., NASDAQ) continue to be the financial markets of choice for IPOs among Asian entrepreneurs, although many Asian firms, upon listing, have performed poorly. This paper surveys the existing literature and summarizes the main advantages and disadvantages associated with a U.S. listing by an Asia-based venture. The paper also examines the post-IPO experience of four Asian companies which illuminate issues that are particularly relevant for Asian entrepreneurs. Our findings indicate that a U.S. listing can provide Asian companies with increased liquidity, visibility, and business opportunities. But being public in the U.S. brings disadvantages that include disclosure and reporting requirements, risk of lawsuits, and additional expenses. Our case studies reveal that successful U.S. listings require Asian firms to fully commit to transparency and investor relations programs. Based on our findings, we develop practical guidelines as to when a U.S. IPO may be sensible for an Asian venture.

Date: 2007
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DOI: 10.1142/S0218495807000101

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