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Financial leverage and competitive strategy of cross-listing firms

Author

Listed:
  • Chi-Lin Yang

    (Department of Urban Industrial Management and Marketing, University of Taipei, Taipei, Taiwan)

  • Min-Hsien Chiang

    (Institute of International Business, National Cheng Kung University, Tainan, Taiwan)

  • Chien-Wei Chen

    (Department of International Business, National Chengchi University, Taipei, Taiwan)

Abstract

This study investigates the relationship between financial leverage and competitive strategies based on the investigation into the cross-listing announcements, through which the financial condition of a firm might shape the competition outcome. The empirical evidence shows that cross-listing announcements normally attract positive market responses to cross-listed firms but incur negative market responses to rival firms, especially upon the strategic substitutes competition. Cross-listed firms obtain more positive market responses if their financial leverage is lower, but the firms have no advantages when they are financially constrained. Less leveraged rival firms could weaken the negative impact and even gain positive market responses upon the strategic complements competition. JEL classification: G14, G32, M16

Suggested Citation

  • Chi-Lin Yang & Min-Hsien Chiang & Chien-Wei Chen, 2019. "Financial leverage and competitive strategy of cross-listing firms," Australian Journal of Management, Australian School of Business, vol. 44(2), pages 306-324, May.
    • Handle: RePEc:sae:ausman:v:44:y:2019:i:2:p:306-324
    DOI: 10.1177/0312896218792967
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    More about this item

    Keywords

    Competitive strategy; cross-list; event study; financial leverage; firm value;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration

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