| dc.description.abstract | Understanding the reasons for and the impact of cross-listing has become a more and more important issue with the deepening globalization of capital markets. This study uses samples of Chinese listed companies that choose to cross-list on the Hong Kong Stock Exchange between 1996 and 2009 and adopts matched samples method and ordinary least squares analysis to investigate (1) whether the financial leverage level of cross-listed companies is lower than that of non-cross-listed companies; (2) whether the financial leverage level rises after cross-listing for a period of time; (3) whether the financial leverage level of companies whose state ownership is lower rises more than that of companies whose state ownership is higher.
The results are as follows. First, the debt ratio of cross-listed firms is lower than that of non-cross-listed firms, because amelioration of corporate governance resulted from cross-listing are more significant on equity agency problems than on debt agency problems. Second, by comparing the firms that cross-listed less and more than 3, 5, 10 years, we can’t find evidence that the leverage level rises. Instead, it appears that firms cross-listed longer have lower debt ratio, showing cross-listing advantages of reputation, liquigity, and so on which are beneficial to equity financing need a period of time to act apparently. Third, after cross-listing, the leverage of firms whose state ownership is lower doesn’t rise more than firms whose state ownership is higher. In fact, companies who have higher state ownership still rely more on debt financing. It states that for Chinese cross-listed firms, those who have higher state ownership can obtain debt financing because of their high state ownership and those who have lower state ownership have lower debt ratio because cross-listing help them get funds through equity financing. Finally, the state ownership has a positive influence on debt ratio of Chinese cross-listed firms. The ratio of state ownership is one of the important causes of financial leverage differences.
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