IDEAS home Printed from https://ideas.repec.org/a/eee/corfin/v14y2008i3p183-199.html
   My bibliography  Save this article

Does corporate control determine the cross-listing location?

Author

Listed:
  • Abdallah, Wissam
  • Goergen, Marc

Abstract

This paper explains the choice of the cross-listing location with particular emphasis on the level of investor protection provided by the host market. We find that firms with concentrated control, with a higher level of risk and those with more pronounced financing needs cross-list on a market with better investor protection. We also find support for the bonding hypothesis as firms from markets with weak shareholder protection tend to cross-list on markets with significantly higher shareholder protection.

Suggested Citation

  • Abdallah, Wissam & Goergen, Marc, 2008. "Does corporate control determine the cross-listing location?," Journal of Corporate Finance, Elsevier, vol. 14(3), pages 183-199, June.
    • Handle: RePEc:eee:corfin:v:14:y:2008:i:3:p:183-199
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0929-1199(08)00021-7
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ariane Chapelle & Marco Becht, 1997. "Ownership and control in Belgium," ULB Institutional Repository 2013/9979, ULB -- Universite Libre de Bruxelles.
    2. Zingales, Luigi, 1994. "The Value of the Voting Right: A Study of the Milan Stock Exchange Experience," The Review of Financial Studies, Society for Financial Studies, vol. 7(1), pages 125-148.
    3. Marc Goergen & Luc Renneboog, 1999. "Strong Managers and Passive Institutional Investors in the UK," Working Papers 1999.21, Fondazione Eni Enrico Mattei.
    4. Shahrokh M Saudagaran & Gary C Biddle, 1995. "Foreign Listing Location: A Study of MNCs and Stock Exchanges in Eight Countries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 26(2), pages 319-341, June.
    5. Dahlquist, Magnus & Pinkowitz, Lee & Stulz, René M. & Williamson, Rohan, 2003. "Corporate Governance and the Home Bias," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(1), pages 87-110, March.
    6. La Porta, Rafael & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. "Legal Determinants of External Finance," Journal of Finance, American Finance Association, vol. 52(3), pages 1131-1150, July.
    7. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    8. Leuz, C & Verrecchia, RE, 2000. "The economic consequences of increased disclosure," Journal of Accounting Research, Wiley Blackwell, vol. 38, pages 91-124.
    9. Abe de Jongand & Rezaul Kabir & Teye Marra & Ailsa Roell, 1999. "Ownership and Control in the Netherlands," Working Papers 1999.22, Fondazione Eni Enrico Mattei.
    10. Tesar, Linda L. & Werner, Ingrid M., 1995. "Home bias and high turnover," Journal of International Money and Finance, Elsevier, vol. 14(4), pages 467-492, August.
    11. Bernardo Bortolotti & Marcella Fantini & Carlo Scarpa, 2002. "Why Do Governments Privatize Abroad?," International Review of Finance, International Review of Finance Ltd., vol. 3(2), pages 131-161, June.
    12. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer & Robert Vishny, 2002. "Investor Protection and Corporate Valuation," Journal of Finance, American Finance Association, vol. 57(3), pages 1147-1170, June.
    13. Reese, William Jr. & Weisbach, Michael S., 2002. "Protection of minority shareholder interests, cross-listings in the United States, and subsequent equity offerings," Journal of Financial Economics, Elsevier, vol. 66(1), pages 65-104, October.
    14. Craig Doidge & G. Andrew Karolyi & Karl V. Lins & Darius P. Miller & René M. Stulz, 2009. "Private Benefits of Control, Ownership, and the Cross‐listing Decision," Journal of Finance, American Finance Association, vol. 64(1), pages 425-466, February.
    15. Barca, Fabrizio & Becht, Marco (ed.), 2001. "The Control of Corporate Europe," OUP Catalogue, Oxford University Press, number 9780199247424.
    16. Alexander, Gordon J. & Eun, Cheol S. & Janakiramanan, S., 1988. "International Listings and Stock Returns: Some Empirical Evidence," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 23(2), pages 135-151, June.
    17. Admati, Anat R & Pfleiderer, Paul & Zechner, Josef, 1994. "Large Shareholder Activism, Risk Sharing, and Financial Market Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1097-1130, December.
    18. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
    19. Diamond, Douglas W & Verrecchia, Robert E, 1991. "Disclosure, Liquidity, and the Cost of Capital," Journal of Finance, American Finance Association, vol. 46(4), pages 1325-1359, September.
    20. Paul Brockman & Dennis Y. Chung, 2003. "Investor Protection and Firm Liquidity," Journal of Finance, American Finance Association, vol. 58(2), pages 921-937, April.
    21. Yamori, N. & Baba, T., T., 1999. "Japanese Management Views on Overseas Exchange Listings: Survey Results," Papers pb99-05, Economisch Institut voor het Midden en Kleinbedrijf-.
    22. Himmelberg, Charles P. & Hubbard, R. Glenn & Love, Inessa, 2002. "Investor protection, ownership, and the cost of capital," Policy Research Working Paper Series 2834, The World Bank.
    23. Marco Pagano & Ailsa A. Röell & Josef Zechner, 2002. "The Geography of Equity Listing: Why Do Companies List Abroad?," Journal of Finance, American Finance Association, vol. 57(6), pages 2651-2694, December.
    24. Marco Becht & Fabrizio Barca, 2001. "The control of corporate Europe," ULB Institutional Repository 2013/13302, ULB -- Universite Libre de Bruxelles.
    25. Franck Bancel & Cusha Mittoo, 2001. "European Managerial Perceptions of the Net Benefits of Foreign Stock Listings," European Financial Management, European Financial Management Association, vol. 7(2), pages 213-236, June.
    26. Lau, Sie Ting & Diltz, J. David & Apilado, Vincent P., 1994. "Valuation effects of international stock exchange listings," Journal of Banking & Finance, Elsevier, vol. 18(4), pages 743-755, September.
    27. Lucian Arye Bebchuk, 1994. "Efficient and Inefficient Sales of Corporate Control," NBER Working Papers 4788, National Bureau of Economic Research, Inc.
    28. Becht, M.C. & Chapelle, A. & Renneboog, L.D.R., 1999. "Shareholding Cascades : The Separation of Ownership and Control in Belgium," Other publications TiSEM 7a15c5ff-a909-44ed-abb6-9, Tilburg University, School of Economics and Management.
    29. repec:bla:jfinan:v:53:y:1998:i:6:p:2107-2137 is not listed on IDEAS
    30. Kang, Jun-Koo & Stulz, Rene M., 1997. "Why is there a home bias? An analysis of foreign portfolio equity ownership in Japan," Journal of Financial Economics, Elsevier, vol. 46(1), pages 3-28, October.
    31. repec:bla:jfinan:v:58:y:2003:i:2:p:921-938 is not listed on IDEAS
    32. Beni Lauterbach & Haim Reisman, 2004. "Keeping Up with the Joneses and the Home Bias," European Financial Management, European Financial Management Association, vol. 10(2), pages 225-234, June.
    33. Lucian Arye Bebchuk, 1994. "Efficient and Inefficient Sales of Corporate Control," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(4), pages 957-993.
    34. Doidge, Craig, 2004. "U.S. cross-listings and the private benefits of control: evidence from dual-class firms," Journal of Financial Economics, Elsevier, vol. 72(3), pages 519-553, June.
    35. Siegel, Jordan, 2005. "Can foreign firms bond themselves effectively by renting U.S. securities laws?," Journal of Financial Economics, Elsevier, vol. 75(2), pages 319-359, February.
    36. Oren Fuerst, 1998. "A Theoretical Analysis of the Investor Protection Regulations Argument for Global Listing of Stocks," Yale School of Management Working Papers ysm106, Yale School of Management.
    37. Marco Becht, 2001. "Beneficial ownership in the United States," ULB Institutional Repository 2013/13336, ULB -- Universite Libre de Bruxelles.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Georgieva, Dobrina & Jandik, Tomas, 2012. "Alternative paths of convergence toward U.S. market and legal regulations: Cross-listing vs. merging with U.S. bidders," Journal of Multinational Financial Management, Elsevier, vol. 22(5), pages 230-251.
    2. Goergen, Marc & Renneboog, Luc, 2008. "Contractual corporate governance," Journal of Corporate Finance, Elsevier, vol. 14(3), pages 166-182, June.
    3. Smith, Deborah Drummond & Gleason, Kimberly C. & Kannan, Yezen H., 2021. "Auditor liability and excess cash holdings: Evidence from audit fees of foreign incorporated firms," International Review of Financial Analysis, Elsevier, vol. 78(C).
    4. Dodd, Olga & Louca, Christodoulos & Paudyal, Krishna, 2015. "The determinants of foreign trading volume of stocks listed in multiple markets," Journal of Economics and Business, Elsevier, vol. 79(C), pages 38-61.
    5. Mishra, Anil V. & Ratti, Ronald A., 2011. "Governance, monitoring and foreign investment in Chinese companies," Emerging Markets Review, Elsevier, vol. 12(2), pages 171-188, June.
    6. Manuela Geranio, 2012. "Cross-listing and the Evolution of Global Stock Market Liquidity," Chapters, in: Geoffrey Poitras (ed.), Handbook of Research on Stock Market Globalization, chapter 9, Edward Elgar Publishing.
    7. Daugherty, Mary & Georgieva, Dobrina, 2011. "Foreign cultures, Sarbanes-Oxley Act and cross-delisting," Journal of Multinational Financial Management, Elsevier, vol. 21(4), pages 208-223, October.
    8. Nattawoot Koowattanatianchai & Kulkunya Prayarach, 2016. "How the ASEAN Exchanges integration affects firms' position on the ASEAN Link and abnormal returns: evidence from Thailand," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 11(1), pages 58-82.
    9. Olga Dodd & Bart Frijns & Aaron Gilbert, 2015. "On the Role of Cultural Distance in the Decision to Cross†List," European Financial Management, European Financial Management Association, vol. 21(4), pages 706-741, September.
    10. Chintrakarn, Pandej & Jiraporn, Pornsit & Treepongkaruna, Sirimon & Mook Lee, Sang, 2022. "The effect of board independence on dividend payouts: A quasi-natural experiment," The North American Journal of Economics and Finance, Elsevier, vol. 63(C).
    11. Yang, Xingquan & Yang, Zheng & Ren, Xiaoyi, 2022. "Deregulation of short selling and corporate cash dividend policy: A quasi-natural experiment from China," The North American Journal of Economics and Finance, Elsevier, vol. 63(C).
    12. Wang, Daphne & Esqueda, Omar A., 2014. "National cultural effects on leverage decisions: Evidence from emerging-market ADRs," Research in International Business and Finance, Elsevier, vol. 31(C), pages 152-177.
    13. Shoham, Amir & Lee, Sang Mook & Khan, Zaheer & Tarba, Shlomo Y. & Ahammad, Mohammad Faisal, 2020. "The effect of board gender diversity on cross-listing," Journal of Corporate Finance, Elsevier, vol. 65(C).
    14. Abdallah, Abed AL-Nasser & Abdallah, Wissam, 2019. "Does cross-listing in the US improve investment efficiency? Evidence from UK firms," The Quarterly Review of Economics and Finance, Elsevier, vol. 72(C), pages 215-231.
    15. Temouri, Yama & Driffield, Nigel & Bhaumik, Sumon Kumar, 2016. "A strategic perspective of cross-listing by emerging market firms: Evidence from Indonesia, Mexico, Poland and South Africa," Journal of International Management, Elsevier, vol. 22(3), pages 265-279.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bailey, Warren & Andrew Karolyi, G. & Salva, Carolina, 2006. "The economic consequences of increased disclosure: Evidence from international cross-listings," Journal of Financial Economics, Elsevier, vol. 81(1), pages 175-213, July.
    2. Sarkissian, Sergei & Schill, Michael J., 2012. "The nature of the foreign listing premium: A cross-country examination," Journal of Banking & Finance, Elsevier, vol. 36(9), pages 2494-2511.
    3. Christian Leuz & Karl V. Lins & Francis E. Warnock, 2010. "Do Foreigners Invest Less in Poorly Governed Firms?," The Review of Financial Studies, Society for Financial Studies, vol. 23(3), pages 3245-3285, March.
    4. Karolyi, G. Andrew, 2012. "Corporate governance, agency problems and international cross-listings: A defense of the bonding hypothesis," Emerging Markets Review, Elsevier, vol. 13(4), pages 516-547.
    5. Ghadhab, Imen & M’rad, Mouna, 2018. "Does US cross-listing come with incremental benefit for already UK cross-listed firms," The Quarterly Review of Economics and Finance, Elsevier, vol. 69(C), pages 188-204.
    6. John Ammer & Sara B. Holland & David C. Smith & Francis E. Warnock, 2004. "Look at me now: the role of cross-listing in attracting U.S. investors," International Finance Discussion Papers 815, Board of Governors of the Federal Reserve System (U.S.).
    7. Karl V. Lins & Francis E. Warnock, 2004. "Corporate governance and the shareholder base," International Finance Discussion Papers 816, Board of Governors of the Federal Reserve System (U.S.).
    8. Lucian A. Bebchuk & Michael S. Weisbach, 2012. "The State of Corporate Governance Research," Springer Books, in: Sabri Boubaker & Bang Dang Nguyen & Duc Khuong Nguyen (ed.), Corporate Governance, edition 127, pages 325-346, Springer.
    9. Juliet D’Souza & William L. Megginson & Robert Nash, 2013. "An empirical analysis of cross-listing decisions in share-issue privatizations: evidence from developed and developing countries," Chapters, in: Mario Levis & Silvio Vismara (ed.), Handbook of Research on IPOs, chapter 23, pages 531-551, Edward Elgar Publishing.
    10. D'Souza, Juliet & Nash, Robert, 2017. "Private benefits of public control: Evidence of political and economic benefits of state ownership," Journal of Corporate Finance, Elsevier, vol. 46(C), pages 232-247.
    11. Renée Adams & Daniel Ferreira, 2008. "One Share-One Vote: The Empirical Evidence," Review of Finance, European Finance Association, vol. 12(1), pages 51-91.
    12. Giannetti, Mariassunta & Simonov, Andrei, 2003. "Which Investors Fear Expropriation? Evidence from Investors' Stock Picking," CEPR Discussion Papers 3843, C.E.P.R. Discussion Papers.
    13. Randall Morck & Michael Percy & Gloria Tian & Bernard Yeung, 2005. "The Rise and Fall of the Widely Held Firm: A History of Corporate Ownership in Canada," NBER Chapters, in: A History of Corporate Governance around the World: Family Business Groups to Professional Managers, pages 65-148, National Bureau of Economic Research, Inc.
    14. Laura Rondi & Julie Ann Elston, 2009. "Corporate Governance And Capital Accumulation: Firm‐Level Evidence From Italy," Scottish Journal of Political Economy, Scottish Economic Society, vol. 56(5), pages 634-661, November.
    15. Chaiyasit Anuchitworawong, 2010. "The Value of Principles-Based Governance Practices and the Attenuation of Information Asymmetry," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 17(2), pages 171-207, June.
    16. Gozzi, Juan Carlos & Levine, Ross & Schmukler, Sergio L., 2008. "Internationalization and the evolution of corporate valuation," Journal of Financial Economics, Elsevier, vol. 88(3), pages 607-632, June.
    17. Roosenboom, Peter & van Dijk, Mathijs A., 2009. "The market reaction to cross-listings: Does the destination market matter?," Journal of Banking & Finance, Elsevier, vol. 33(10), pages 1898-1908, October.
    18. Claessens, Stijn & Yurtoglu, B. Burcin, 2013. "Corporate governance in emerging markets: A survey," Emerging Markets Review, Elsevier, vol. 15(C), pages 1-33.
    19. Hail, Luzi & Leuz, Christian, 2009. "Cost of capital effects and changes in growth expectations around U.S. cross-listings," Journal of Financial Economics, Elsevier, vol. 93(3), pages 428-454, September.
    20. Marc Goergen, 2005. "Corporate Governance Convergence: Evidence From Takeover Regulation Reforms in Europe," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 21(2), pages 243-268, Summer.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:corfin:v:14:y:2008:i:3:p:183-199. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jcorpfin .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.