Why do Small Chinese Firms List on Frankfurt Stock Exchange?

Recently, Chinese firms have become more active in attempting to go public on the Frankfurt Stock Exchange (FWB). This paper uses multivariate probit analysis to test the motivations of Chinese firms to list on the FWB. In general, Chinese firms are driven by the following motivations. Firstly, they pursue relatively more stringent listing standards and closer monitoring than the Hong Kong Growth Enterprise Market (GEM) and the London Alternative Investment Market (AIM). Secondly, they are motivated by emerging needs for external financing. Moreover, this paper also examines the post-issue performance of Chinese listings on the FWB. It turns out that Chinese firms listed on the FWB not only show bad operating performance but also bad stock performance. However, they are no exceptions since many Chinese firms listed on other foreign stock exchanges also under-perform the market average.