Search

The bonding hypothesis posits that a firm may improve its governance practices by listing in a foreign developed stock market, thereby subjecting itself to better legal and regulatory rules of the foreign market as well as to a superior level of scrutiny by gatekeepers in the market, which are unavailable in the home market. Previous studies have shown that the bonding effect has occurred on Chinese companies listed in Hong Kong. This article specifically questions whether the effect is accrued in the domain of gatekeeper scrutiny. First, it examines the role of four alleged gatekeepers in the stock markets of China and Hong Kong, i.e., sponsor, corporate attorney, credit rating agency, and auditor. Then, it proceeds to consider whether and to what extent Chinese companies are subject to a superior level of scrutiny by these gatekeepers on account of their being listed in Hong Kong. [ABSTRACT FROM AUTHOR]