Transformations  in
Business & Economics

ANALYSIS ON CROSS-LISTING MOTIVATIONS OF CHINESE ENTERPRISES: A PERSPECTIVE OF BEHAVIORAL HETEROGENEITY
Hong Xu, Ying Fu

ABSTRACT. In consideration of the poor explanation of traditional cross-listing motivation theories in the heterogeneous cross-listing behaviours of Chinese enterprises, this study aims to search for a reasonable explanation for cross-listing motivations from the perspectives of capital cost, private benefits of control, and product market competition strategy. In this study, 49 Chinese enterprises, which were simultaneously listed as A-shares in Chinese stock exchanges and H-shares in Hong Kong Stock Exchange from 1993 to 2017, were chosen and divided into "outside-in" and "inside-out" cross listing groups. The effects of capital cost, private benefits of control, separation degree between the capital and product markets, and domestic product market share on the cross-listing behaviours of Chinese enterprises were verified on the basis of such samples through multiple regression estimations by using the cross-listing dummy variable as a dependent variable. Results show that reducing the capital cost, relieving the separation degree between the capital and product markets, and consolidating the domestic market share are the cross listing motivations for Chinese enterprises to return and cross-list in their domestic stock market, whereas relieving the separation degree between the capital and product markets, and alleviating the increasing saturated domestic product market are the cross-listing motivations for Chinese enterprises to go abroad and cross-list in overseas stock markets. However, the motivation of the private benefits of control has no remarkable impacts on the two types of cross-listing behaviours. These conclusions explain why Chinese enterprises "return" to execute cross listing and provide new dimensions to interpret cross-listing motivations, performing as an extension of the existing cross-listing motivation theories .

KEYWORDS:  cross-listing, capital cost, separation degree, private benefits of control, product market share.

JEL classification:  G32, G38, M1.