Market failure and reemergence: A study of Chinese firms listed in the US.
Our study documents a “Lemons” market failure of Chinese firms listed in the US in 2011 and a subsequent rebound by 2013. Our tests reveal that there was little difference in ex ante observable characteristics of fraudulent and non-fraudulent Chinese firms listed in the US prior to 2011 while entrep...
Saved in:
Main Authors: | , , |
---|---|
Format: | text |
Language: | English |
Published: |
Institutional Knowledge at Singapore Management University
2016
|
Subjects: | |
Online Access: | https://ink.library.smu.edu.sg/soa_research/1591 https://ink.library.smu.edu.sg/context/soa_research/article/2618/viewcontent/SSRN_id2845180.pdf |
Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
Institution: | Singapore Management University |
Language: | English |
id |
sg-smu-ink.soa_research-2618 |
---|---|
record_format |
dspace |
spelling |
sg-smu-ink.soa_research-26182017-08-10T08:34:06Z Market failure and reemergence: A study of Chinese firms listed in the US. Hai LU, LU, Hai LUO, Wei Our study documents a “Lemons” market failure of Chinese firms listed in the US in 2011 and a subsequent rebound by 2013. Our tests reveal that there was little difference in ex ante observable characteristics of fraudulent and non-fraudulent Chinese firms listed in the US prior to 2011 while entrepreneurs appear to have known their type. We document substantial costs of dishonesty and the failure of traditional market signaling mechanisms such as auditor or underwriter quality. We also show a return of Chinese firms after US and Chinese regulatory intervention in 2013 although this intervention was insufficient to fundamentally change the character of this market. Importantly, we find that factors capturing ex post settling up costs such as North America sales and CEO’s US education reduced the probability of financial fraud. Our results support the importance of legal and regulatory institutions as a necessary condition for properly functioning capital markets. 2016-09-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/soa_research/1591 https://ink.library.smu.edu.sg/context/soa_research/article/2618/viewcontent/SSRN_id2845180.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Accountancy eng Institutional Knowledge at Singapore Management University Chinese Firms IPOs Frauds Lemons market Information Asymmetry Asian Studies Marketing |
institution |
Singapore Management University |
building |
SMU Libraries |
continent |
Asia |
country |
Singapore Singapore |
content_provider |
SMU Libraries |
collection |
InK@SMU |
language |
English |
topic |
Chinese Firms IPOs Frauds Lemons market Information Asymmetry Asian Studies Marketing |
spellingShingle |
Chinese Firms IPOs Frauds Lemons market Information Asymmetry Asian Studies Marketing Hai LU, LU, Hai LUO, Wei Market failure and reemergence: A study of Chinese firms listed in the US. |
description |
Our study documents a “Lemons” market failure of Chinese firms listed in the US in 2011 and a subsequent rebound by 2013. Our tests reveal that there was little difference in ex ante observable characteristics of fraudulent and non-fraudulent Chinese firms listed in the US prior to 2011 while entrepreneurs appear to have known their type. We document substantial costs of dishonesty and the failure of traditional market signaling mechanisms such as auditor or underwriter quality. We also show a return of Chinese firms after US and Chinese regulatory intervention in 2013 although this intervention was insufficient to fundamentally change the character of this market. Importantly, we find that factors capturing ex post settling up costs such as North America sales and CEO’s US education reduced the probability of financial fraud. Our results support the importance of legal and regulatory institutions as a necessary condition for properly functioning capital markets. |
format |
text |
author |
Hai LU, LU, Hai LUO, Wei |
author_facet |
Hai LU, LU, Hai LUO, Wei |
author_sort |
Hai LU, |
title |
Market failure and reemergence: A study of Chinese firms listed in the US. |
title_short |
Market failure and reemergence: A study of Chinese firms listed in the US. |
title_full |
Market failure and reemergence: A study of Chinese firms listed in the US. |
title_fullStr |
Market failure and reemergence: A study of Chinese firms listed in the US. |
title_full_unstemmed |
Market failure and reemergence: A study of Chinese firms listed in the US. |
title_sort |
market failure and reemergence: a study of chinese firms listed in the us. |
publisher |
Institutional Knowledge at Singapore Management University |
publishDate |
2016 |
url |
https://ink.library.smu.edu.sg/soa_research/1591 https://ink.library.smu.edu.sg/context/soa_research/article/2618/viewcontent/SSRN_id2845180.pdf |
_version_ |
1770573484349456384 |