Overseas listing location and cost of capital: Evidence from Chinese firms listed in Hong Kong, Singapore, and the United States

Overseas listing location and cost of capital: Evidence from Chinese firms listed in Hong Kong, Singapore, and the United States

As at the end of 2012, more than 600 nonstate-owned Chinese firms were listed in overseas stock markets. We find that Chinese firms listed in the US have the lowest cost of capital when compared to those listed in Hong Kong and Singapore, and these results hold when controlling for firm characterist...

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Bibliographic Details
Main Authors: Warrington College of Business, LI, Frank Weikai, Central University of Finance and Economics
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2019
Subjects:
cost of capital
institutional environment
overseas listing
Asian Studies
Corporate Finance
Finance and Financial Management
Online Access:https://ink.library.smu.edu.sg/lkcsb_research/6662
https://ink.library.smu.edu.sg/context/lkcsb_research/article/7661/viewcontent/Overseas_Listing_Location_Chinese_Firms_av.pdf
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Institution: Singapore Management University
Language: English
Description
Summary:As at the end of 2012, more than 600 nonstate-owned Chinese firms were listed in overseas stock markets. We find that Chinese firms listed in the US have the lowest cost of capital when compared to those listed in Hong Kong and Singapore, and these results hold when controlling for firm characteristics and the endogeneity of listing locations. Cross-sectional tests indicate that listing in the US is more beneficial to those firms which face higher information asymmetry and agency costs. Overall, our evidence supports the view that the institutional environment has a first-order impact on a firm’s cost of capital.

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