United States: Two more US-listed Chinese companies come under financial scrutiny

Two more US-listed Chinese companies are under scrutiny for allegedly inflating their financial data, less than a week after Luckin Coffee admitted to a US$310 million accounting fraud, in a simmering scandal about corporate governance that may block the pipeline of companies seeking to raise funds on US markets.

TAL Education Group, a Beijing-based operator of tuition centres listed on the New York Stock Exchange, said an employee may have inflated the sales of a business segment worth hundreds of millions of dollars. Separately, Nasdaq-listed Chinese video streaming company iQiyi was accused by activist short sellers Wolfpack Research and Muddy Waters of making up its 2019 revenue by up to 44 per cent, while its user number was inflated by 60 per cent.

Shares of both companies fell in after-hours trading. TAL shares plunged by as much as 28 per cent, most recently changing hands at US$45.90. Shares of its biggest competitor New Oriental Education & Technology Group fell 6 per cent in after-hours trading in New York.

The full original article can be found at scmp.com


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