China's Baidu Faces U.S. Stock Market Delisting Threat Amid Accounting Oversight Dispute Escalation

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Hyunjung] The U.S. financial authorities have included Baidu, China's largest portal company, on the list of companies at risk of being delisted from the stock market for failing to meet accounting oversight requirements.

On the 30th (local time), Bloomberg reported that the U.S. Securities and Exchange Commission (SEC) added Baidu to the list of companies facing potential delisting. The SEC also identified Futuholdings, Nio, iQIYI, and Kashi Pharmaceutical as provisional delisting candidates. Following this news, Baidu's stock price fell by up to 2.7% on the New York Stock Exchange.

This measure is based on the U.S. "Holding Foreign Companies Accountable Act (HFCAA)" enacted in 2020, which mandates that companies listed on U.S. stock exchanges undergo financial audits by oversight bodies such as the Public Company Accounting Oversight Board (PCAOB). In contrast, China amended its Securities Law in 2019 to prohibit domestic companies from voluntarily submitting accounting data to foreign authorities without government approval. Because of this, Wall Street has anticipated that over 230 companies headquartered in China and Hong Kong listed on U.S. stock exchanges would be subject to enforcement. The market capitalization of these companies amounts to approximately 2,000 trillion won.

With the SEC adding more companies to the delisting risk list, the total number of companies under SEC regulation has increased to 11. Previously, the SEC had included Yum China, a Chinese restaurant franchise operator, biotech companies BeiGene and Zai Lab, HutchMed, and semiconductor equipment maker ACM Research on the related list.

The U.S. and China have been in conflict over accounting oversight rights for more than 20 years. After the U.S. Congress passed the HFCAA in 2020, the PCAOB and SEC set a three-year deadline; companies failing to meet the requirements within this period will be delisted from U.S. stock markets. In such cases, they could disappear from the New York Stock Exchange and Nasdaq as early as 2024.

This content was produced with the assistance of AI translation services.