Case studies on companies that delisted from US and relisted in China

Abstract

China concept stocks, the stock in a company that operates in mainland China and listed in the US, are becoming the largest group of non-native listed stocks in the US in terms of market value. This paper reviews the peaks and troughs of China concept stocks listed in the US in the past two decades, analyzes the reasons why Chinese companies have had to raise funds in the US, the benefits of an IPO in US stock market, and their post-IPO stock performance. In order to evaluate whether Chinese stocks listed in the US are successful or not, this paper tracks the status of 283 stocks that listed in the US from 2000 to 2019, uncovering the abnormal fact that nearly 1/3 of them ultimately delisted from US stock market. For the delisting stocks, this paper analyzes the effect of financial fraud at some companies and its overall negative impact on China concept stocks. The signal effect of fraud is so significant that over 80 companies claimed privatization under reputational pressures while only 8 companies were forced to delist due to financial fraud. Finally, this paper discusses the future of China concept stocks in the US and proposes some advice for Chinese companies.