An empirical study on financial performance evaluation of Chinese A and H cross-listed companies

Abstract

With the improvement of China's economic openness and the perfection of capital market, an increasing number of mainland Chinese companies have been listed on both the mainland stock exchanges (A-share) and the Hong Kong Stock Exchange (H-share). Facing intense international competition, it is urgent for the cross-listed companies to improve their financial performance and further achieve sustainable development. This paper evaluates the financial performance of Chinese A and H cross-listed companies based on a list of financial indicators in 2016 using the factor analytic approach. In this paper, we construct a new financial performance evaluation system based on the financial data of these companies. A comparison of different industries, ownerships and economic zones is also conducted. Our empirical findings include: First, we extract four aspects of ability, including profitability, operation ability, debt-paying ability and development ability, to comprehensively reflect the financial performance of Chinese A and H cross-listed companies. Second, we confirm that there are significant variations in the financial performance of Chinese A and H cross-listed companies among industries, ownerships and economic zones. Lastly, some suggestions are further provided in accordance with the evaluation results to improve the financial performance of Chinese A and H cross-listed companies.