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Avoiding China's Capital Market: Evidence From Hong Kong-Listed P-Chips And Red-Chips, Weishi Jia, Grace Powell, Jingram Zhao

Business Faculty Publications

The purpose of this paper is to explore the puzzle of why so many Chinese firms eschew listings in China. Hundreds of firms founded in China have reorganized themselves as overseas corporations and listed on the Hong Kong Stock Exchange. These firms are called Red-chips if they are state-owned enterprises (SOEs) and Pchips if they are not state-owned (non-SOEs). To examine the rationale behind the listing decisions of P-chips and Red-chips, we compare the characteristics of Red-chips (P-chips) with SOEs (non-SOEs) listed on China stock exchanges. We find that SOEs are more likely to list in China. Moreover, while we …