Cross-listing and bonding premium: Evidence from Chinese listed companies

This paper examines whether cross-listing enables firms to earn a higher valuation. We contrast a sample of 580 Chinese firms cross-listed on the B-share market of China and 159 Chinese firms cross-listed on the Hong Kong H-share market against a control sample of domestic firms listed only on the A-share market of China. It is found that firms cross-listed on B-share and H-share markets both enjoy bonding premiums. Moreover, the bonding premium is larger for H-share firms than for B-share firms. Results show that the amount of bonding premium is positively related to the level of investor protection, which provides supporting evidence to the bonding theory.