Volume 13, Number 2, December 2018
| Does Overseas-Listing Benefit the Shareholder? |
Tung-Yueh Pai¹, Chien-Ming Huang²*, Yun-Lung Wan³
Abstract
This paper aims to investigate whether cross-listed companies experience changes in their ownership structure after the oversea listing to improve the firm performance or exploit the weak shareholder’s rights. The conclusions are still ambiguous in the existence of current studies. Therefore, using the sample group of cross-listed companies in the Hang Seng China AH Premium Index from 2005 to 2014, we adopt the two-stage least square method to examine the alignment effects, conflict-of-interest hypothesis or strategic alignment hypothesis. To capture the relevant relationships between firm performance and controlling shareholders, the indicators of accounting-based performance and market-based performance are used in our analysis. The empirical results found that the largest ten shareholders will tend to increase the holding proportions when firm size and leveraged effect increase and the stock price commonly exists in over-reaction. Moreover, when the increase in the controlling shareholders’ holdings can improve supervised qualification and increase firm profitability, foreign institutional investors will tend to sell their shares to the largest shareholders after cross-listing. This finding is consistent with the strategic alignment hypothesis. Finally, we conclude that the variation of foreign institutional holdings will provide important information to determine whether the stock price presents a premium or discount.
Keywords: Cross-Listed companies, Alignment effects, Strategic alignment hypothesis.
JEL Classification: G1, G3
¹ Assistant Professor, Department of Institute of Management, Minghsin University of Science and Technology, Taiwan
² Assistant Professor, Department of Banking and Finance, TamKang University, Taiwan (*Corresponding Author, E-mail: snapshop68@yahoo.com.tw)
³ PhD candidate, Tamkang University, Taiwan