Going global? Examining the geography of Chinese firms’ overseas listings on international stock exchanges

Abstract

In a globalising world, as economies are becoming increasingly integrated the number of firms seeking to connect to global capital markets and list on international stock exchanges is rapidly rising. Up to 2011 there have been more than 1000 Chinese firms listed on overseas stock exchanges. As a dynamic and emerging economy, the connection of Chinese firms to global capital markets and flows has the potential to reshape economic geography at a variety of geographical scales. Despite this, there has been limited academic enquiry attending to these issues and exploring the internationalisation of Chinese firms through overseas listing. Using a comprehensive dataset, this paper addresses this research lacuna and provides a preliminary analysis of the geography of overseas listings. The paper describes how the trend and geography of Chinese firms listing overseas started in the late 1980s but has grown rapidly in the past decade. Hong Kong, New York, Singapore, and London are the major destinations of larger Chinese firms for overseas listing, while emerging destinations such as Germany, South Korea, Australia, and Canada are attracting more firms. We found that firms in different locations and sectors favoured different markets. Generally listing firms tend to originate from eastern China, reflecting the spatial pattern of the Chinese economy. The paper argues that there are two main factors influencing the geography of Chinese firms’ overseas listing activity. The first is the role of the state in influencing, and in some cases, directly determining the locational choice of overseas listing for Chinese firms. The second is the effect of proximity preferences in influencing the decision taken by some firms to list in particular overseas markets. The paper closes with a discussion on the impacts of overseas listings domestically in China and globally on international exchanges where firms list.