TO BE OR NOT TO BE? AN EMPIRICAL STUDY ON DUAL-CLASS SHARE STRUCTURE OF US LISTED CHINESE COMPANIES

摘要

In China, a number of recent amended financial policies and legislation have been facilitating hostile takeovers hugely through providing abundant leverage capital and increasing the difficulty of takeover regulation. Therefore, it is a feasible solution to the boom of hostile takeover via entitling companies to adopt more takeover defenses autonomously, in particular, DCSS. The Chinese companies with DCSS listed on the US stock exchanges after 2011 have achieved a great success in terms of not only financial scale and raised funds, but also stock return and market capitalization. Such outperformance could provide practical insights that the adoption of DCSS in China may bring about a similar outcome. However, the potential risks to companies and shareholders which may be symbiotic with the adoption of DCSS should not be ignored. Therefore, the core issue lies in seeking a balance. In case DCSS is adopted, a set of strict restrictions is a feasible way to achieve the balance. Both the US and Japan permit the adoption of DCSS, and their practices provide some useful experience which could be transplanted to China with localization, e.g. the restriction on transfer and the stock unit system. Moreover, CSRC should try its best to avoid misuse of DCSS through undertaking more responsibilities, e.g. periodical assessment. In conclusion, it is feasible to adopt DCSS as a hostile takeover defense in China; however, the application shouldbe employed with strict restrictions.