IPO trend and IPO decision for Chinese Internet companies

Abstract

With the development of the Chinese economy, a considerable number of Chinese Internet companies have chosen to enter the U.S. stock exchange market for financing, to achieve their development goals, and to increase their overseas reputation. The demands of corporate funds can be achieved by overseas listing. The well-developed stock market can efficiently regulate operation of the company. This research paper analyzes the current status and motivations of overseas listings of Chinese Internet companies, using multiple regression models to explore the impact of price-earnings ratios on listing locations, and utilizing t-test and simple regression to explore the impact of stock market index on IPO location. The research results indicates that the price-earnings ratio and stock market index have a positive relationship with IPO location. In addition, comparing the listing requirements of the Chinese and American exchanges, the conclusion is that the company chose to list on exchanges with strict disclosure requirements, thereby obtaining a higher issue valuation and investor expectations.