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Who services VIEs?

This is another guest posting by my former student Fredrik Oqvist. I find it unsurprising that PwC has a dominant market share among accounting firms since this firm invented the use of the VIE structure in China.

As we move along thetrove of VIE dataanother thing that I think is interesting to look at is who is servicing the VIEs? VIEs are usually not set up by the companies themselves but by advisors in legal and sometimes accounting.

Traditionally a lot of focus has been placed on the accounting firms, which is natural as the VIE entity itself is something of an accounting creation. Spawned in the aftermath of the Enron scandal to prevent accounting shenanigans, it was the reinterpreted to allow for the listing of Chinese companies in restricted sectors.

But since it is primarily the work of advisors, it seems prudent for us to have some idea of who these advisors are, and how they rank among themselves. In order to do this I looked at both who audits VIE’d companies and who the legal advisor is.

Statistics on VIE usage 2018


This is a guest post from Fredrik Oqvist, a former student who has long focused on VIEs. Fredrik has posted this on his blog.

After a number of requests from professionals and people in academia I decided to use the summer to renew my statistics on VIE usage. As the last one waspublished in 2011, it seemed like it was about time.

I used a list I foundonlineand added in newer IPOs and cleaned up some delistings etc., but as I don’t have access to Bloomberg I can’t guarantee I was able to find all the US-listed Chinese companies. If someone has a better list please feel free to send it over and I’ll update the statistics based on that. All the data was lifted from SEC filings, and encompasses the NYSE and NASDAQ listed Chinese companies.

Although the total number of companies in my sample is down significantly, the percentage of companies using VIEs is up by quite a margin. Given that newer listings, even in 2011, display a higher percentage of VIE usage overall, this is not very surprising, but it does highlight that the importance of understanding VIE structures is if anything more important now than before.

Copyright 2018 Paul L. Gillis all rights reserved