Unfazed by Regulatory Risks, Chinese Companies Upsize U.S. IPOs in Q3

    Q3 IPO proceeds up by 350% to $5.9 billion YoY

    Sustaining momentum may require clarity on listing and audit standards

    Despite a directive from a White House working group that could lead the SEC to close the door to companies whose auditors are not PCAOB-inspected, Chinese companies continued to raise significant amounts of capital on U.S. exchanges in the third quarter of 2020.

    In Investing in China, IPOs

    The Year of the SPAC

    With $40 Billion of Capital Available, Will SPACs Become a Viable Alternative to the Traditional IPO?

    Amid this year’s white-hot IPO market, the SPAC, or special purpose acquisition company, has incinerated previous records for this once-obscure financing vehicle. Thus far, in 2020, 116 SPACs have been funded through initial public offerings, raising $40 billion. SPACs make up the single largest “industry” group in 2020’s crop of IPOs, accounting for 45% of the number of new issues and 44% of total capital raised. More "blank check" companies debuted on NASDAQ and NYSE in August and September than "real" operating companies. The financing vehicle has attracted a host of luminaries, from investment icons like Bill Ackman of Pershing Square and Peter Thiel, baseball savant Billy Beane of “Moneyball,” and former Speaker of the House Paul Ryan.

    In SEC Audits, Advisory

    White House Weighs in on China Audit Conundrum

    Can the “co-audit” concept untangle PCAOB inspection impasse?

    On August 7th, the President's Working Group on Financial Markets weighed in on the dangers that investing in Chinese companies posed to U.S. investors. This report is the latest salvo following the passage of Senate's Holding Foreign Companies Accountable Act in May and an SEC roundtable on the risks of investing in emerging markets in July.

    In SEC Audits

    Auditors Face Access Challenges as COVID Pandemic Drags On

    The COVID-19 pandemic has created novel challenges for the audit profession that could have lingering impacts on the quality and reliability of independent accounting firm’s work if not carefully addressed. The increased reliance on remote auditing needs to be carefully managed particularly for auditors with clients in areas like China and Europe, where travel restrictions limit site visits compared to domestic locations that can be visited with COVID protocols in place. Management, audit committees, and investors all need to be aware of the limitations that auditors are operating under and the steps that can be taken to ensure that audit quality remains robust during this period.

    In SEC Audits

    Despite Risks, Chinese Companies Continue to Flock to U.S. Exchanges

    Reading the headlines, one would think that this would be the worst of all possible moments for a Chinese company to contemplate a U.S. IPO. Tensions over issues ranging from trade to managing the COVID-19 pandemic are at a boiling point. The Senate recently passed legislation requiring the SEC to delist Chinese companies whose auditors do not comply with U.S. regulators' inspections. Some commentators have predicted a looming “divorce” between the world’s two largest economies.

    In IPOs

    Is China Getting Serious About Accounting & Governance?

    CSRC signals open to international cooperation on inspections

    For years I have heard a familiar refrain from American investors: They would love to be able to participate in China’s economic growth, if only they could trust the accuracy of the accounting. Unfortunately, episodic blowups of listed Chinese companies have sown doubts about the reliability of their financial reporting and governance practices. In cases when serious problems emerged, there was limited recourse available to hold management accountable or secure compensation.

    In Investing in China

    Guidance in the Season of the COVID-19 Virus

    As the Dow Jones officially entered bear market territory and the WHO declared COVID-19 to be a pandemic, over 150 companies have lowered or withdrawn their earnings guidance as of March 11, 2020. As an increasing number of countries take dramatic steps to slow the spread of the virus and the disruption to business operations increases, that list is sure to grow.

    In Advisory
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