Is Cross-Listing a Commitment Mechanism? Evidence from Cross-Listings around the World
This paper examines the firms’ foreign listing location decision, using cross-listings data from 28 origin countries to 9 destinations during 1994-2008, Our main finding is that firms are more likely to choose cross-listing destinations that are less strict on regulating self-dealing or exhibit higher block premiums relative to the origin country, and this tendency is more pronounced after Sarbanes-Oxley in 2002. Moreover, firm characteristics that are positively correlated with likelihood of a US cross-listing, such as high tech or high Tobin’s q, are also positively correlated with likelihood of cross-listings in Germany or Switzerland both of which exhibit low investor protection. These findings are in contrast to the widely accepted “bonding” hypothesis that firms choose to cross-list to voluntarily commit themselves to higher disclosure standards.
Keywords: cross-listing; private benefits; commitment; investor protection; bonding hypothesis; alternative-specific logit model
학회소식
학회소식
[2011년 제 1차] Is Cross-Listing a Commitment Mechanism?
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2011-02-23