Corporate governance, growth opportunities, and the choices of cross-listings: The case of Chinese ADRs

Lee Hsien Pan, Chien-Ting Lin and Pei-Chi Yang

Pacific-Basin Finance Journal, 2013, vol. 24, issue C, 221-234

Abstract: We examine the inter-relationships among internal governance, firm attributes, and the listing choices of American Depositary Receipts (ADRs) for Chinese firms. We find that Chinese ADRs exhibit better performance, higher growth opportunities, and stronger internal governance than domestic firms prior to and after ADR listings. Furthermore, we find that the listing choices are influenced by Chinese firms' growth opportunities and internal governance. Those with lower growth opportunities tend to choose a Level 1 listing that restricts capital-raising but does not require U.S. regulatory compliance. In contrast, those with higher growth opportunities prefer a Level 3 listing that permits public offerings but requires full regulatory compliance. As a result, the improvement in the internal governance of Level 3 ADRs is more pronounced than that of Level 1 ADRs in the post-listing period. This suggests that the extent of improvement in governance is related to the firm attributes and the motivations behind cross-listings.

Keywords: Chinese ADRs; Firm characteristics; Corporate governance; Cross-listings (search for similar items in EconPapers)
JEL-codes: G34 M41 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:24:y:2013:i:c:p:221-234

DOI: 10.1016/j.pacfin.2013.07.002

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