1. Would it be a good move for CF Industries Holdings to list its stock on Chinese stock exchanges? What are the possible advantages and disadvantages of such a move? Based on your analysis, what would you recommend to financial managers of CF Industries Holdings?
Based on CF Industries Holdings’ business operations, it can be considered a good move for the company to list its stock on Chinese stock exchanges. Notably, the company is a global leader in the transformation of natural gas into nitrogen. In particular, the chemical procedures that the organization utilizes make certain that there is nitrogen necessitated to support life on earth and this encompasses having products that eradicate harmful discharges from industrial activities. The company’s operations is a good prospect for foreign investors in China, a nation that is presently faced with problems of plenty of emissions in its environment from industrial actions. Therefore, by listing its stock on the Chinese stock exchanges, the company is bound to fine and attract several investors who would like to be shareholders to the organization (CF Industries Holdings, 2017).
There are possible advantages of cross-listing for CF Industries Holding and having its stock listed on Chinese stock exchanges. One of the key advantages of cross-listing encompasses the financial increases. By listing into the Chinese stock exchanges the company will have it as a source of financing and raising capital funds at a cheaper cost in comparison to debt financing. This is largely for the reason that the stocks of CF Industries Holdings will be more accessible to foreign investors, which might be otherwise limited owing to global investment obstacles, precluding them from gaining access to certain markets. Therefore, this implies that the company will have additional funds to conduct its business operations and perhaps include aspects such as research and development to augment its status in the market. Another advantage is that CF Industries Holdings will be able to raise its liquidity levels. Basically, this will enable the organization to undertake trading of its shares in several time zones as well as different exchanges. This will augment CF Industries Holdings’ liquidity and increase its capability to raising capital...
References
CF Industries Holdings. (2017). Who We Are. Retrieved from: https://www.cfindustries.com/who-we-are
Ernst & Young. (2014). The benefits of listing on US exchanges. Retrieved from: http://www.ey.com/Publication/vwLUAssets/EY_-_The_benefits_of_listing_on_US_exchanges/$FILE/EY-The-benefits-of-listing-on-US-exchanges.pdf
Ibrahim, A., Youssef, M. (2013). The Rationale Behind Cross-Listing: Its Implications On Corporate Governance. Retrieved from: http://www.tamimi.com/en/magazine/law-update/section-5/september-3/the-rationale-behind-cross-listing-its-implications-on-corporate-governance.html
Investopedia. (2017). ADR Basics: What Is An ADR? Retrieved from: http://www.investopedia.com/university/adr/adr1.asp
Sekine, E. (2008). Listings by foreign-invested companies on mainland Chinese stock exchanges once again in the limelight. Nomura Capital Market Review, 11(3), 8-23. Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1289226
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