China Magic Going Home

The largest Chinese energy company is thinking about a cross-listing back into the mainland stock exchange, after seeing the valuation of comparable companies on the so-called A share market sky-rocketing. We discuss the cause and the consequence of investor sentiment on the cross-listing decision of firms, and the responsibilities of corporate managers to maximize existing shareholder interests through catering to such investor sentiment. Learning Objective: This case is used to teach students about the segmentation of international financial markets, irrationality, and the resulting catering behavior of corporations.