The research on the impact of listing regime on innovation for the biotech industry: Inspiration and experience from MB Rules 18A published by HKEX

• Main Author: DONG, Yueying
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2024
• Subjects: Business Administration, Management, and Operations; Technology and Innovation
• Online Access: https://ink.library.smu.edu.sg/etd_coll/648; https://ink.library.smu.edu.sg/context/etd_coll/article/1646/viewcontent/PhD_Yueying_Dong.pdf
• Institution: Singapore Management University

The development of the Biotech Industry is not only connected to the national economy and livelihood of the people, but also affects the technology development, economy growth and national security of the country. The development depends on the technology innovation, with the essence for the continuous process of financial ecology guiding and technology refresh driving. For high-tech intensive industries of biotech companies, the development of the equity market is an important support for promoting the technology innovation. The capital market in guiding resource allocation has the responsibility of optimizing the listing regime, providing more external financing channels and promoting the development and innovation for biotech companies, which can alleviate financing constraints and urge to improve the financial environment of biotech companies, and allow investors to share the growth benefits of companies. Hong Kong Exchanges and Clearing Limited (“HKEX”) made amendments to the proposed Main Board Listing Rules on April 2018. The Exchange is adding new Chapter 18A-Biotech Companies (“MB Rules 18A”) to permit listings of biotech companies that do not meet any of the Main Board financial eligibility tests. MB Rules 18A can effectively alleviate the financing difficulties of biotech companies in the capital market and support to promote the development of the Biotech Industry. The dissertation examines the characteristics of biotech companies and analyzes listings requirements under MB Rules 18Acompared to other exchanges, and finally recognizes the listing rationality and risk prevention of biotech companies under MB Rules 18A. Meanwhile, this dissertation verifies through case analysis how MB Rules 18A address the innovation of biotech companies and thereby contribute to sustainable economy growth. The result of case analysis indicates that MB Rules 18A can enhance the innovation capability of biotech companies. To be specific, the more significant effect of MB Rules 18A enhancing innovation for companies with the higher the leverage ratio or the higher shareholding percentage of international intermediary agencies, with increasing revenue and expanding scale. By means of analysis of mesomeric effect, it can be found that companies listed under MB Rules 18A increased their innovation investment after listing compared to companies listed under non-18A rules, mainly due to the significant expansion of company scale. These have enriched our understanding of MB Rules 18A, providing theoretical basis and practical inspiration for companies to optimize their capital structure and promote technology innovation through policy advantages. The dissertation also conducts case analysis on companies listed under MB Rules 18A. Analysis shows that MB Rules 18A provides financing opportunities of early listing for biotech companies, promoting the research and commercialization process. But financing ability and opportunities after listing depend on whether the company has significant innovative research and development capabilities. The dissertation not only verifies the important role of MB Rules 18A in alleviating financing constraints, improving financial environment, and enhancing market value of biotech companies from multiple theoretical and empirical perspectives, but also sets an example for exploring the effectiveness and feasibility of making customized listing rules for special industries, subsequently providing an effective way for rules expansion of special industries.