Abstract
Most previous studies indicated that a stock tends to show positive returns prior to cross-listing date and negative returns, at least in the first few weeks following cross listings in global capital markets, especially in the NYSE and the AMEX. So, what is the case between Hong Kong and Mainland China, where plays an inversed cross-listing mode. Besides, what's interesting is the cross listing trends increase rapidly between these two regions recently, though a global-wide declining happened during the past several years. This paper provides a test of how the listing of corresponding A shares in China domestic stock market affects their corresponding H shares in Hong Kong security market. It is shown that the corresponding H shares experience negative abnormal returns, (ARs) at least in the first few weeks following the domestic listing date. Besides, PRC regulators are encouraging their broad-listed SOEs to dual list back to A share market. But, is this a proper action, based on current unwell-established China capital market, where high risk exists?
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