Does Corporate Control Determine the Cross-Listing Location?

Abdallah, Wissam; Goergen, Marc

doi:10.2139/ssrn.820084

Cited by 8 publications

(16 citation statements)

References 47 publications

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“…Abdallah and Goergen (2008-this issue) 1990-2000 18 home markets, 19 host markets Improvement in investor protection − Firms from countries with weaker investor protection are more likely to cross-list on stock markets with significantly higher investor protection.…”

Section: Cross-listingsmentioning

confidence: 99%

Contractual corporate governance

Goergen

Renneboog

2008

Journal of Corporate Finance

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Companies have the choice to deviate from their national corporate governance standards by opting into another system. They can do so via contractual devices -such as cross-border mergers and acquisitions, (re)incorporations, and cross-listings -which enable them to choose their preferred level of investor protection and regulation. This paper reviews these three main contractual governance devices, their effect on value, and whether their adoption by firms induces a race to the bottom or a race to the top. Indeed, firms may opt for less shareholderorientation or investor protection (shareholder-expropriation hypothesis) rather than for more stringent rules that require firms to focus on shareholder value (bonding hypothesis).

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Section: Cross-listingsmentioning

confidence: 99%

Contractual corporate governance

Goergen

Renneboog

2008

Journal of Corporate Finance

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“…They conclude that firms with a strong need for external capital to finance growth commit themselves to improved corporate governance by crosslisting on a US stock exchange and thereby subjecting themselves to the scrutiny of US securities laws. Abdallah and Goergen (2008) examine the choice of host exchange for a sample of firms crosslisting across a number of different stock exchanges. Using as their variable of interest the change in investor protection resulting from crosslisting, they conclude that decisions to crosslist are made consistent with the predictions of the bonding hypothesis.…”

Section: Evidence In Favor Of Bondingmentioning

confidence: 99%

“…Sarkissian and Schill (2004) examine 2,251 listings from 44 home countries across 25 host markets and report that "home bias" has a significant influence on the listing destination. Lel and Miller (2008) and Abdallah and Goergen (2008) examine both US and non-US listings and find support for bonding in the crosslisting decision. Some studies examine the crosslisting destinations from the perspective of market competitiveness and the current attractiveness of a US exchange listing.…”

Section: Cross Listings Outside the Usmentioning

confidence: 99%

“…The predictions of LaPorta et al (1997; regarding the governance effects of country legal regime are validated in a variety of empirical studies. In a review of six studies (i.e., Reese and Weisbach, 2002;Doidge, 2004;Doidge et al, 2004;Abdallah and Goergen, 2008;Lel and Miller, 2008), Goergen and Renneboog (2008) conclude that firms from countries with limited or weak investor protections will crosslist on exchanges located in countries with stronger law and legal precedent against the expropriation of outside shareholders.…”

Section: Legal Protectionsmentioning

confidence: 99%

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The Effect of Crosslisting on Corporate Governance: A Review of the International Evidence

Ferris¹,

Kim²,

Noronha³

2009

Corporate Governance

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Manuscript Type: ReviewResearch Question: This review essay examines the mechanisms by which crosslisting of a firm's shares on a foreign stock exchange and its subsequent exposure to an international capital market can induce changes in corporate governance. We also review reasons why a firm might elect to use crosslisting to improve investor perception of the quality of its governance. Research Findings/Results: After a review of the existing literature, we conclude that there is substantial support for legal bonding in the decision to crosslist, with lesser evidence consistent with reputational bonding. We also conclude that firm growth opportunities and the need for external capital are critical factors in a decision to crosslist. Theoretical Implications: This study synthesizes the extensive empirical work done on crosslisting and consequent changes in corporate governance structures. It also highlights a number of areas that require further research including more direct testing of governance changes following crosslisting, the effect of crosslisting on corporate equity ownership structures, and the investment/new securities issuance behavior of firms subsequent to crosslisting. This research will help to chart the path of future academic study by scholars of international corporate governance. Practical Implications: This review of the empirical evidence will contribute to the identification of a set of best practices that can lead to improved governance for firms worldwide. Furthermore, the discussion of what remains unexamined by governance researchers will help to shape the contours of future policy and legislative debate.

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“…Typically, firms from countries with weak investor protection cross-list on markets with stronger protection (Abdallah and Goergen, 2008). By cross-listing in the U.S., foreign firms agree to be subject to -and thus effectively "rent" -strong U.S. laws and regulations (Coffee, 1999(Coffee, , 2002.…”

Section: Introductionmentioning

confidence: 99%