The following is a discussion of Jia, Pownall, and Zhao (2018). Jia et al. (2018) assess why Chinese firms list in either Hong Kong or China. The independent variables of interest in the main analysis are SOE—an indicator variable that indicates whether the Chinese firm is a state-owned enterprise (SOE), ROA—return on assets, a proxy for how profitable a firm is, and SOE * ROA—an interaction term that is the product of the two aforementioned variables. The paper generally finds the following outcomes: (1) Chinese SOEs (categorized as Red-chips if they list in Hong Kong) display an increased likelihood of listing in China; (2) Chinese non-SOE firms (categorized as P-chips if they choose to list in Hong Kong) are more likely to list in Hong Kong the more profitable they are; and (3) profitability has a limited impact on the listing decisions of Chinese SOEs.

The...

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