A group of researchers from Stanford and Wharton wonder how an IPO system in the United States, tweaked to allow more listings of Foreign Private Issuers (FPIs), has been hijacked by shabby Chinese companies who have, and for many years, systematically bilked investors?
That Chinese issuers (plus their enablers and other dodgy operators), literally now for decades, have had fun with their listings in the U.S. isn’t new news. In 2017 a documentary ‘The China Hustle’ detailed years of abuses (then!) which have carried merrily on.
The authors summarize; “We review evidence demonstrating the extremely poor financial performance and high-risk characteristics of these firms. We also review evidence demonstrating elevated levels of insider abuse.” The paper is a short one but the picture it paints is truly shocking. Videlicet?
I confess to a hair-trigger when it comes to unfair ‘China Bashing’, but there’s a real case to be answered here. This practice colors how many U.S. investors view China business ethics and is to every honest (the vast majority BTW) operator’s dis-benefit. It should be stopped.
It’s a mystery why authorities in the U.S. (and China’s Securities Regulatory Commission, they could end this at a stroke) haven’t done something about this already?
The bigger mystery perhaps after so many years of abuse is why fools keep turning up expecting the next Made-in-China pre-revenue-ai-biotechfinco IPO, to somehow-this-time, be different?
The paper is a quick read and you’ll find if via this link Why Are Chinese Companies Listed In The U.S. Subject To Lower Disclosure Standards?
Happy Sunday.