Market Reaction to Enterprise's Equity Carve-out Listing on the STAR Market - A Case Study of Tianneng Power
Year: 2024
Type: article
Abstract: Since the 1980s, numerous European and American companies have opted for a capital operation strategy involving carve-out and listing to facilitate healthy development and concentrate on their core businesses. In China, however, carve-out listings only commenced relatively recently, and the development process has been somewhat slower than in other countries. In response to the growing sophistication of China's capital market, the China Securities Regulatory Commission (CSRC) introduced a set of regulations governing the carve-out of subsidiaries of listed companies on the domestic A-share market in 2019. Since the inception of the A-share market and the issuance of the relevant rules, many eligible listed companies have announced their intention to undertake a carve-out listing. This has been particularly prevalent among technology and manufacturing companies. Consequently, carve-out listings on the STAR Market may emerge as a novel focal point for investment in China's capital market. As a pioneering enterprise in China's new energy power battery industry and a listed company on the H-share market, Tianneng Power's approach and trajectory towards carving out its subsidiary Tianneng Battery and listing it on the STAR Market serve as a paragon for other enterprises in the industry. This article examines the specific motivations of Tianneng Power to carve out its subsidiary and list it on the STAR Market. The event study method was employed to analyse the short-term market reaction of the listed company within 10 trading days before and after the issuance of the first carve-out announcement. The results indicate that the market responded favourably on the day of the event, with the stock market and investors displaying a positive attitude towards Tianneng Power's carve-out behaviour.
DOI: 10.54097/p770hy21
Author: Zenan Wang
Institution: Nanjing University of Science and Technology
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4401666847