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What if Trading Location Is Different from Business Location? Evidence from the Jardine Group

Authors

  • Kalok Chan,

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    • Chan is with the Department of Finance, Hong Kong University of Science and Technology; Hameed is with the Department of Finance and Accounting, National University of Singapore; and Lau is with the Division of Banking and Finance, Nanyang Technological University. We thank an anonymous referee, Linda Allen, David Ding, Rick Green (the editor), Branson Kwok, Thomas McInish, Ingrid Werner, and seminar participants at Cornell University, Hong Kong Baptist University, Hong Kong Polytechnic University, National University of Singapore, University of Wisconsin at Milwaukee, 2000 APFA Meetings (Shanghai), 2001 FMA Meetings (Toronto), and 2002 AFA Meetings (Atlanta) for helpful comments. Chan acknowledges the financial support from the Fund for Wei Lun Fellowships (HKUST), and Hameed acknowledges the support from NUS Research Grant. Part of the work was completed when Chan was visiting National University of Singapore. All errors are our own.

  • Allaudeen Hameed,

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    • Chan is with the Department of Finance, Hong Kong University of Science and Technology; Hameed is with the Department of Finance and Accounting, National University of Singapore; and Lau is with the Division of Banking and Finance, Nanyang Technological University. We thank an anonymous referee, Linda Allen, David Ding, Rick Green (the editor), Branson Kwok, Thomas McInish, Ingrid Werner, and seminar participants at Cornell University, Hong Kong Baptist University, Hong Kong Polytechnic University, National University of Singapore, University of Wisconsin at Milwaukee, 2000 APFA Meetings (Shanghai), 2001 FMA Meetings (Toronto), and 2002 AFA Meetings (Atlanta) for helpful comments. Chan acknowledges the financial support from the Fund for Wei Lun Fellowships (HKUST), and Hameed acknowledges the support from NUS Research Grant. Part of the work was completed when Chan was visiting National University of Singapore. All errors are our own.

  • Sie Ting Lau

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    • Chan is with the Department of Finance, Hong Kong University of Science and Technology; Hameed is with the Department of Finance and Accounting, National University of Singapore; and Lau is with the Division of Banking and Finance, Nanyang Technological University. We thank an anonymous referee, Linda Allen, David Ding, Rick Green (the editor), Branson Kwok, Thomas McInish, Ingrid Werner, and seminar participants at Cornell University, Hong Kong Baptist University, Hong Kong Polytechnic University, National University of Singapore, University of Wisconsin at Milwaukee, 2000 APFA Meetings (Shanghai), 2001 FMA Meetings (Toronto), and 2002 AFA Meetings (Atlanta) for helpful comments. Chan acknowledges the financial support from the Fund for Wei Lun Fellowships (HKUST), and Hameed acknowledges the support from NUS Research Grant. Part of the work was completed when Chan was visiting National University of Singapore. All errors are our own.


Abstract

We examine the price behavior and market activity of the Jardine Group companies after they were delisted from Hong Kong in 1994. Although the trading activity of the Jardine Group moved to Singapore, the core businesses remained in Hong Kong and Mainland China. Evidence indicates the Jardine stocks are correlated less (more) with the Hong Kong (Singapore) market after the delisting. This result cannot be explained by various hypotheses, such as relocation of core business, time-varying betas, migration of trading activity, and currency and tax distortions. We conclude that price fluctuations are affected by country-specific investor sentiment.

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