The Public Company Accounting Oversight Board (PCAOB), responsible for authorizing firms to audit US-listed companies, has previously given clearance to 110 Chinese auditing houses, but is demanding the ability to inspect them. With the Chinese government still refusing to allow this, PCAOB is now vaguely threatening to revoke the licenses of all Chinese audit firms.
This is described as a “nuclear option” with two serious consequences: on the one hand, it would make Chinese companies give up on the US stock markets, on the other hand, it would make it impossible for American companies to have their Chinese operations audited. Such a development would have troublesome implications for Chinese investments as it would further restrict the already limited possibilities for foreigners to buy Chinese stocks. However, the final outcome not yet known as the governments are still in negotiations.
