Racing Towards the Top?: The Impact of Cross-Listings and Stock Market Competition on International Corporate Governance

Coffee, John C.

doi:10.2139/ssrn.315840

Cited by 277 publications

(283 citation statements)

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“…Firms issuing ADR face different enforcement and institutional incentives -i.e. extra enforcement by American Securities and Exchange Commission (SEC) -tending to present more transparent disclosure (Coffee, 2002), and to improve investor protection (Benos & Weisbach, 2004;Reese & Weisbach, 2002). The impact of country specific factors on the level of earnings management of global players is not clear, since these factors might not be as relevant as for those firms that are only traded in their domestic markets.…”

Section: Ifrs Adoption and Firm-level Incentives: The Role Of Global mentioning

confidence: 99%

International Financial Reporting Standards and Earnings Management in Latin America

Rathke

Santana

Lourenço³

et al. 2016

Rev. adm. contemp.

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ResumoEssa pesquisa analisa o nível de gerenciamento de resultados na América Latina após a adoção das International Financial Reporting Standards (IFRS), em comparação aos países anglo-saxões e europeu-continentais. Ela também analisa o efeito da listagem de ações nos Estados Unidos sobre a comparação do nível de gerenciamento de resultados das empresas latino-americanas com empresas estrangeiras. A literatura sobre gerenciamento de resultados considerando países menos desenvolvidos ainda está em construção, e poucos estudos focam esse tema, especialmente na América Latina, apesar de sua relevância para a economia global. A presente pesquisa preenche essa lacuna por meio do exame do nível de gerenciamento de resultados nos principais países latino-americanos que adotam as IFRS (Brasil e Chile), em comparação com os principais países anglo-saxões com tradição em IFRS (Reino Unido e Austrália), e com as principais economias da Europa Continental (França e Alemanha). Os resultados demonstram que os latino-americanos apresentam um maior nível de gerenciamento de resultados que os anglo-saxões e europeu-continentais, e esse comportamento oportunista se mantém significativo quando apenas global players com listagem de ações nos Estados Unidos são analisados. Logo, mesmo com um conjunto único de padrões contábeis de elevada qualidade (IFRS) e fortes incentivos à divulgação, as características específicas dos países produzem forte influência na forma como as IFRS são implementadas em cada país. Palavras-chave: IFRS; gerenciamento de resultados; América Latina. AbstractThis study analyzes the level of earnings management in Latin America after the adoption of the International Financial Reporting Standards (IFRS) and analyzes the role of cross-listing in the United States. The literature on earnings management in less developed countries is still under construction, and few studies focus on this issue, especially with respect to Latin America, despite its relevant role in the global economy. This paper fills this gap in the literature as it analyzes the level of IFRS earnings management regarding the first and main Latin American countries applying IFRS (Brazil and Chile), when compared to the main Anglo-Saxon countries with IFRS tradition (United Kingdom and Australia), and with the main Continental European economies (France and Germany). The results show that Latin American firms present a higher level of earnings management than Continental European and Anglo-Saxon firms, and this opportunistic behavior remains significant when only global players with cross-listing in the United States are analyzed. Thus, even with a unique set of high quality accounting standards (IFRS) and strong reporting incentives, countries' specific characteristics still play an important role in the way IFRS is implemented in each country.

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Section: Ifrs Adoption and Firm-level Incentives: The Role Of Global mentioning

confidence: 99%

International Financial Reporting Standards and Earnings Management in Latin America

Rathke

Santana

Lourenço³

et al. 2016

Rev. adm. contemp.

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“…NOTE 1. Coffee (1999Coffee ( , 2002 and Stulz (1999) contend that bonding is a mechanism through which foreign firms from countries with weak legal environments commit themselves to provide investors with greater shareholder protections. This bonding hypothesis is based on the difference in the development of financial markets and investor protection among countries.…”

Section: Resultsmentioning

confidence: 99%

“…As suggested by Coffee (1999Coffee ( , 2002 and Stulz (1999), firms bond themselves to stricter disclosure rules and legal environments by listing their equity on foreign exchanges, and consequently, reduce agency costs. Because foreign firms from weak legal regimes that cross-list on the US stock exchanges (Levels II and III ADRs) are required to comply with the US disclosure requirement, the bonding hypothesis of Coffee (1999Coffee ( , 2002 and Stulz (1999) implies that cross-listing improves a firm's corporate governance through improved disclosure rules and stricter securities laws. 1 This belief also suggests that cross-listing firms provide their shareholders with better protections.…”

Section: Cross-listing and Corporate Governancementioning

confidence: 99%

Capital Structure Changes around Cross-Listings

Liao¹,

Tamm²

2014

Advances in Financial Economics

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If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. ABSTRACTPurpose À We examine what changes, if any, firms are making to their capital structure around the time they cross-list because both of these affect a firm's corporate governance. Cross-listing requires firms to follow SEC rules and regulations, which helps improve the firm governance. A firm's capital structure, specifically the use of debt, is an effective way to mitigate the conflict between managers and shareholders by reducing the cash available to managers. We examine whether these governance mechanisms are complimentary or being used as substitutes by crosslisting firms.Methodology À We compare the capital structures of Level II and Level III cross-listing firms from both civil law and common law countries in the three years before and the three years after cross-listing.Findings À We show firms are significantly reducing their debt to equity ratio after the cross-listing. This reduction is shown for both Level II and Level III firms; however, it is primarily seen in civil law countries.Practical implications À The corporate governance improvement firms recognize by cross-listing is partially offset by the reduced use of debt

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“…Stulz (1999) suggests that improving corporate governance through cross‐listing will reduce the cost of external financing. Similarly, Coffee (1999, 2002) discusses the effect of legal bonding by arguing that to reduce the cost of external financing, managers of firms can commit themselves to improve the level of investor protection through cross‐listing on an exchange with better regulations, which will bond them from consuming the private benefits of control. La Porta et al (2000, 2002), Lombardo and Pagano (1999a, 1999b), and Reese and Weisbach (2002) offer theoretical and empirical support for the bonding argument.…”

Section: Background and Hypotheses Developmentmentioning

confidence: 99%

The Effect of Cross-Listing on Trading Volume: Reducing Segmentation Versus Signaling Investor Protection

Abdallah

Saad

2011

Journal of Financial Research

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We examine the relation between cross‐listing on the U.S. and UK regulated and unregulated exchanges and trading volume for a sample of 500 foreign firms from 34 countries. We find that the increase in trading volume is a function of both reducing segmentation and signaling investor protection. In addition, we find that home market trading volume, firm size, firm returns, and analyst forecast accuracy are the major determinants of a firm's trading volume. We also show that U.S. and UK investors trade foreign securities that originate from low‐investor‐protection countries more than they trade those from high‐investor‐protection countries, which is consistent with the bonding hypothesis.

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Racing Towards the Top?: The Impact of Cross-Listings and Stock Market Competition on International Corporate Governance

Cited by 277 publications

References 3 publications

International Financial Reporting Standards and Earnings Management in Latin America

International Financial Reporting Standards and Earnings Management in Latin America

Capital Structure Changes around Cross-Listings

The Effect of Cross-Listing on Trading Volume: Reducing Segmentation Versus Signaling Investor Protection

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