Huang commented on the recent spate of fraud allegations against the Chinese companies

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The coronavirus outbreak triggered ups and downs in the US stocks, with a number of US-listed Chinese stocks embroiled in several fraud scandals by third party short-selling agencies such as Muddy Waters Research and Wolfpack. Allen HUANG, Associate Professor of accounting at the HKUST and IEMS Faculty Associate, commented that the recent spate of fraud allegations against the Chinese companies, such as Luckin coffee, is just a coincidence. He argues that investors may not be aware of the business in China because of geographical, cultural and linguistic constraints. The fact that Chinese enterprises reluctant to disclose more information to the U.S. undermines investors’ confidence. Huang further said, China and the United States are not same in terms of audit quality, regulatory requirements and legal liabilities of the U.S. auditors are greater. Some auditors in China who afraid of offending Chinese companies are not as tight as those in the States.

If China-U.S. relations get worse, the U.S. may strengthen the supervision of Chinese companies listed in the U.S and many Chinese companies may turn to Hong Kong listed. As the U.S. is now facing virus outbreak and the upcoming election, China-U.S. relations and global financial markets are still full of uncertainty.

Read the news article "瑞幸咖啡遭遇做空 疫情危機下中概股受到的放大鏡式狙擊"  published on 10 April 2020 on BBC News Chinese. (Traditional Chinese only)

 

 

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