Abstract
This study examines whether there were any relocation effects and differences in firm characteristics by firms who were successfully relocated to advanced stock exchange system using companies registered in the Chinese New Third Board market from 2015 to 2021.
First, the short-term effect of the disclosure of relocation listing guidance on the stock prices of sample firms was analyzed through the case study methodology. As a result of the study, the cumulative excess return for the study period (T-30 days, T-15 days) before the event date was close to zero (0). However, the study period (T-15 days, 0 days) before the event date, the cumulative excess return shows positive (+) values between 5% and 7%. This can confirm that there is a possibility that information may have been exposed at the time of a resolution of the board of directors before the date of disclosure or that the company's management may have used this information. After the announcement date (day 0, T+5 days), the cumulative average return shows a significant upward trend, suggesting that relocation listing announcement has a positive effect on the company's stock price.
Second, using the T-test test and the propensity score matching-double difference method (PSM-DID), the effect of prior listing guidance disclosure on the financial performance of companies was analyzed. According to the analysis of the difference between successfully relocated companies to advanced exchange (treatment group) and companies that have similar tendencies and have not applied for relocation listing (comparison group), there is no difference in financial variables in the successful relocation listing year (year T). In the year following the successful relocation listing year (year T+1), the treatment group had a larger value than the comparison group in the growth variables. Next, in order to examine whether there is a fundamental difference between the treatment group and the comparison group, the PSM-DID method was used to analyze the performance of relocation listing on the treatment group. Similar to the result of the difference analysis, a significant positive (+) change was observed in the growth variables.
These results show that the company's purpose of raising funds and increasing visibility has been achieved through the relocation listing. This study provides reference data for New Third Board companies preparing for subsequent listing through analysis of the stock price effect and financial performance before and after the announcement of the relocation listing guidance of the sample companies in this study.
First, the short-term effect of the disclosure of relocation listing guidance on the stock prices of sample firms was analyzed through the case study methodology. As a result of the study, the cumulative excess return for the study period (T-30 days, T-15 days) before the event date was close to zero (0). However, the study period (T-15 days, 0 days) before the event date, the cumulative excess return shows positive (+) values between 5% and 7%. This can confirm that there is a possibility that information may have been exposed at the time of a resolution of the board of directors before the date of disclosure or that the company's management may have used this information. After the announcement date (day 0, T+5 days), the cumulative average return shows a significant upward trend, suggesting that relocation listing announcement has a positive effect on the company's stock price.
Second, using the T-test test and the propensity score matching-double difference method (PSM-DID), the effect of prior listing guidance disclosure on the financial performance of companies was analyzed. According to the analysis of the difference between successfully relocated companies to advanced exchange (treatment group) and companies that have similar tendencies and have not applied for relocation listing (comparison group), there is no difference in financial variables in the successful relocation listing year (year T). In the year following the successful relocation listing year (year T+1), the treatment group had a larger value than the comparison group in the growth variables. Next, in order to examine whether there is a fundamental difference between the treatment group and the comparison group, the PSM-DID method was used to analyze the performance of relocation listing on the treatment group. Similar to the result of the difference analysis, a significant positive (+) change was observed in the growth variables.
These results show that the company's purpose of raising funds and increasing visibility has been achieved through the relocation listing. This study provides reference data for New Third Board companies preparing for subsequent listing through analysis of the stock price effect and financial performance before and after the announcement of the relocation listing guidance of the sample companies in this study.
| Translated title of the contribution | The Impacts of the Public Relocation Announcements on Performances of Chinese New Third Board Firms |
|---|---|
| Original language | Korean |
| Pages (from-to) | 13-25 |
| Number of pages | 13 |
| Journal | 경영컨설팅연구 |
| Volume | 22 |
| Issue number | 5 |
| State | Published - Oct 2022 |