The United States and China appear to have reached a landmark deal that would allow Chinese companies to remain listed on US exchanges, halting the threatened delisting of about 200 stocks that trade in New York.
Us public company accounting oversight board of chinese companies that are listed on us exchanges. china had agreed back in 2013 after years the audit work of chinese companies whose but this agreement then collapsed when us the accounts of a large tech company and were stonewalled by regulators. own chinese shares, are hoping that the new there aren’t a lot of details
Available somewhat surprising concession from the chinese the deal is apparently based on the original deal from 2013. four accountants will transfer the companies’ well, it’s a us government agency that was to oversee the audits of public companies and other securities issuers. previously, the auditing profession was self-regulated. now, all of this regulation came in
The wake which brought down arthur andersen – enron’s auditor. andersen was found criminally liable for obstruction it was a huge scandal at the time, and it issue that international companies listed and a lot of us investors are not even aware back in december 2020 president trump passed act, which was essentially an amendment to companies listed on us stock exchanges
To of a foreign government, and it required that to be clear, this law didn’t just focus on chinese companies. where there were obstacles to pcaob inspections so, it focuses mostly on chinese companies, under the 2020 law, if companies didn’t years, their securities would be banned from us exchanges. you have possibly seen in the news that five market capitalization
Of more than $300 billion this is only so surprising as these companies are not under the control of a foreign government shares already took place in hong kong or mainland china. so, why did the auditing of foreign companies well, there had been several scandals that accounting practices, and whether us stock an example at the time was luckin coffee, when this came out,
The stock fell by more with china, but it was probably the most bipartisan it’s possibly more accurate to view it as a few accounting scandals like the luckin governance and better governance is usually good for both markets and investors. on the variety of capitalism in the country in question. the multi-stakeholder model associated with the interests of workers,
Managers, suppliers, the chinese model has been described as state the nature of this model has been changing all chinese companies – both state and private in such a situation, the governance structure corporate governance is obviously of great importance to investors. in businesses knowing that they will be treated fairly. good corporate governance tends to provide a
Positive feedback loop. on this topic, where we looked at the various you can see that there has been a general this is because companies who treat stakeholders in recent years, we have seen some examples in the us facebook (i refuse to call them i used, as they went public with a multiple this meant that mark zuckerberg didn’t have and that is obviously not a shareholder
Friendly structure. i also included the example of alibaba in shares in alibaba, they don’t actually get which they might expect as an investor, instead based shell company that has a contractual this structure is known as a variable interest entity. investment in certain industries like education, media, telecom, and technology. most offshore-listed chinese firms
Use this raise capital internationally, but the structure in fact, cases challenging the vie structure are reluctant to clarify its legal status, flexibility while bringing foreign investment it should be obvious that the structure involves if these structures were invalidated, foreign an good example of things can go wrong is off alipay as an independent company under
His own ownership without consulting or compensating yahoo owned 43% of the company, and this valuable stock price to fall almost 10% when it was announced. well, it would appear that while american transparency, beijing is furious that their for listing in new york rather than shanghai or hong kong. didi, the chinese ride sharing company raised just days after the ipo,
The chinese government chinese app stores, they banned the company investigation into the company’s cyber security practices. going public and after the stock price had fallen around 85%. the chinese capital markets looked to the endorsement of american capital markets and didi was just following the well-worn path president xi, it would appear wants to boost capital
Markets look particularly unimpressive in the aftermath of didi’s ipo, chinese to follow in its footsteps – by listing approval procedures, especially if they manage data deemed sensitive by beijing. companies can and do look around the world and fewer companies going public due to the for this business, but no regulatory regime place where companies with questionable
Corporate despite shares of us-listed chinese companies coming close, there has been no major move in us listed chinese stocks. goldman sachs, who have done a lot of investment us exchanges over the years – published a a 50 per cent chance that chinese companies will eventually be delisted. it is somewhat surprising that china have this front, given the recent tensions
With frosty relationship between china and the united states. announcement comes at a time that china is the china securities regulatory commission, a “feasible path” for the us to carry china still has a huge bureaucracy which means it’s really only when the audit information that china has resolved this issue of what gary gensler – the chair of the sec said as
Proof will be in the pudding,” . “this actually can inspect and investigate completely audit firms in china.” of their securities in the us if they continue gensler said that the agreement “marks the and specific commitments from china that they would allow pcaob inspections” that’s it for now, have a great day, and talk to you again soon.
Transcribed from video
China Delistings? By Patrick BoyleliveBroadcastDetails{isLiveNowfalsestartTimestamp2022-08-31T223010+0000endTimestamp2022-08-31T224802+0000}