ESCP Europe

Item type

Study and report

Dissertation

• MIM Master in Management Grande Ecole

Language

English

Publication year

2021

Subjects

STOCK MARKET LISTING - LEGISLATION - QUOTATION - CASE STUDY - INVESTMENT - INTERNATIONAL ECONOMIC RELATIONS - STOCK EXCHANGE

Geographical area

CHINE - ETATS UNIS

Chinese high-tech companies in the past two decades have been increasingly choosing the USA to IPO instead of the historical attractive location, Hong Kong. This paper addresses this phenomenon by looking at five factors that can influence these companies to list on the Nasdaq or NYSE: eligibility to list, benefits from market spillovers such as free press, reduced impacts of Chinese Currency and Investment regulation, raising sufficient capital, and accessing foreign customers. To test for these factors, we used a clinical study by analyzing the companies Tencent (HKEx), Baidu (Nasdaq), Alibaba (NYSE), and Xiaomi (HKEx). Some of our findings suggest that large and fast-growing Chinese tech companies with high capital needs prefer to IPO in the USA to ensure enough capital is raised. Moreover, Chinese tech startups or low profit companies with strong potential prefer to IPO on the NASDAQ National Market as they generally do not qualify for the HKEx. Companies with complicated voting structures choose to IPO in the USA for the same reasons.