Penny Wise, Pound Foolish: Hong Kong’s Penny Stock Incident Harvard Case Solution & Analysis

Penny Wise, Pound Foolish: Hong Kong's Penny Stock Incident Case Solution

The company issued a paper containing proposals for continued listing eligibility for "penny" stocks. A panic selloff ensued as investors considered that they were about to lose both the market for their shares and also the protection of the listing rules. In one trading day, nearly 10% of the market capitalization for microcap was wiped out.

Was this related to the exchange's status as a for-profit entity following its demutualization? To secure a competitive position against different financial centers and to shed investor doubt about the quality of listed companies, Hong Kong sorely needs better rules to boost better corporate governance and market transparency.

PUBLICATION DATE: September 20, 2005 PRODUCT #: HKU427-HCB-ENG

This is just an excerpt. This case is about STRATEGY & EXECUTION

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