The 2020 Holding Foreign Companies Accountable (HFCA) Act will force China-based firms to delist from U.S. exchanges if China fails to permit audit inspections during a two-year period. The Act also requires such firms, as soon as China blocks such inspections, to disclose ties to the Chinese party-state. We first explain why the delisting provisions, while well-intentioned, may well harm U.S. investors. We then turn to the disclosure provisions, explaining that they appear to be motivated by a desire to name-shame Chinese firms rather than to protect investors. While China-based firms do pose unique risks to U.S. investors, the Act fails to mitigate—and may well exacerbate—these risks.

The U.S. stock market has long been the most popular venue for both foreign companies and global investors. The recent cross-border regulation tensions between the U.S. and China, however, have exposed many U.S.-listed China Concepts Stocks (CCS) to substantial de-listing risks, forcing them to pursue dual listings on the Hong Kong Stock Exchange (HKEX). In this paper, we quantify the economic value of dual-listing, using the SEC’s adoption of the ffnal amendments implementing mandates of the Holding Foreign Companies Accountable Act (HFCAA) on December 2, 2021 as a natural experiment. We estimate that CCS with pre-shock dual-listing status on average have 14.88% higher returns, or USD 8 billion in market capitalization, than their peers listed only on the U.S. exchanges during a three-month period after the shock. Our ffndings survive a set of robustness checks, including parallel trends test, alternative treatment and control groups based on the qualiffed but not yet dual-listed CCS, and various sub-sample and placebo analyses. In addition to stock returns, dual-listed CCS are also less adversely affected in trading volume, volatility, and liquidity. Our ffndings highlight the large economic impact of the escalating political U.S.-China tensions on the global ffnancial markets.