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Asian Review of Financial Research, Vol., No..
pp.75~111
pp.75~111
Is Cross-Listing a Commitment Mechanism? Evidence from Cross-Listings around the World
Jaiho Chung Korea University Business School
Hyejin Cho Korea University Business School
Woojin Kim Korea University Business School
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 crosslisting destinations that are less strict on regulating self-dealing or exhibit higher block premiums relative to the origin country, and that this tendency is more pronounced after Sarbanes-Oxley in 2002. Moreover, firm characteristics that are positively correlated with likelihood of a U.S. 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.
Jaiho Chung
Hyejin Cho
Woojin Kim
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 crosslisting destinations that are less strict on regulating self-dealing or exhibit higher block premiums relative to the origin country, and that this tendency is more pronounced after Sarbanes-Oxley in 2002. Moreover, firm characteristics that are positively correlated with likelihood of a U.S. 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.
cross-listing,private benefits,commitment,investor protection,bonding hypothesis,alternative-specific conditional logit model
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