The problems faced by Chinese IPOs in US are many. Firstly is the wrong portrayal of the business of the firms. The firms describe their business model in a poor manner and they try to portray what they are not to the investors. Many of the firms in the disclosures do not include that they are prohibited from selling certain products due to the government policies.
There is carelessness or the firms do not pay attention to financial projections. They are not serious about the financial projections of the firm. These firms have very receivables which make them vulnerable and they also tend to a poor analysis of the financial performance of the firm. In the initial stages these firms didn’t have CFO but later on due to the norms they formed a team handling the financial aspects of the firm. There were also resignations by the auditors which led to further distrust among the investors of US