Abstract:
I investigate the determinants for Chinese private companies to list in either the U.S. or HK during period of 2000 to 2014. Chinese private companies with higher asset growth, lower leverage, classified as high-tech companies, with negative earnings before listing, and with venture capitalists supporting them are more likely to list in the U.S. HK IPO issuers are generally larger than U.S. IPO issuers in terms of pre-listing total assets. In addition, Chinese private companies are more likely to list where they have a better information environment that is measured by analyst coverage and the number of recent IPOs in the same industry. Subsequent to the listing event, Chinese private companies listed in both the U.S. and HK experience a significant drop in operating performance measures one, two, and three years after the IPO year. Some of the operating performance measures of the Chinese private companies that are listed in the U.S. decline significantly more than those listed in HK. In terms of stock performance, Chinese private companies listed in the U.S. significantly underperform their matching firms one, two, and three years after the IPO year, while Chinese private companies listed in HK only exhibit underperformance in the first year after IPO.
