The liability of foreignness in capital markets: Sources and remedies

Bell, R. Greg; Filatotchev, Igor; Rasheed, Abdul A.

doi:10.1057/jibs.2011.55

Cited by 269 publications

(242 citation statements)

References 137 publications

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“…Cross-listing not only entails high monetary expenses, but also prolongs administrative review processes (Ding et al, 2010;Doidge et al, 2004). In addition, the cross-listed firm has to confront a significant liability of foreignness (Bell et al, 2012;Zaheer, 1995). Therefore, in the short run, MBC pre-cross-listing increases to MBC post-cross-listing/short-run .…”

Section: Cross-listing and The Product Scope Of The Firmmentioning

confidence: 99%

“…Also, listing expenses are often prohibitive, forcing the firm to amortize these expenses in a number of years after the initial cross-listing. 11 Furthermore, especially for a firm from EE, the liability of foreignness is most significant in the short run (Bell et al, 2012). It takes time and energy to adjust to a new, demanding, and unfamiliar institutional system (Zuckerman, 2000).…”

Section: Cross-listing and The Product Scope Of The Firmmentioning

confidence: 99%

“…Illustrated in Figure 3, in the long run, MBC post-cross-listing/long-run is reduced. It is because the listing costs have been amortized and the cross-listed firm enjoys the lower cost of capital that can facilitate its growth (Bell et al, 2012;Khurana et al, 2008). In addition to the lower economic and financial costs, the cross-listed firm has been better adapted to the more demanding institutional environment.…”

Section: Cross-listing and The Product Scope Of The Firmmentioning

confidence: 99%

“…2 While a sizable number of cross-listed firms are from other DE (such as Canada and EU countries) (Pagano, Roell, & Zechner, 2002;Southam & Sapp, 2010), the majority of crosslisted firms in both the U.S. and U.K. markets are now from EE, led by firms, respectively, from China and Russia (Table 1). The liability of foreignness in capital markets substantially affects how crosslisted firms secure their resources in product and capital markets (Bell, Filatotchev, & Rasheed, 2012;Ding, Nowak, & Zhang, 2010). Therefore, the arrival of so many cross-listed firms from EE raises an interesting question: How does cross-listing impact the scope of the firm from EE?…”

Section: Introductionmentioning

confidence: 99%

“…[Insert Table 1] Responding to the calls issued by Agmon (2006), Bell et al (2012), Siegel (2009), andVaaler andZhang (2011) to integrate management and IB research with finance research, we draw on two leading perspectives from the management literature-the resource-based and institution-based views-and extend them to address the question on how cross-listing affects the scope of the firm from EE. These two perspectives have been found to be highly insightful when probing into firm strategy and behavior in EE (Ahuja & Yayavaram, 2011;Hoskisson et al, 2013;Kim, Kim, & Hoskisson, 2010;Meyer et al, 2009;Peng et al, 2009;Wright et al, 2005).…”

Section: Introductionmentioning

confidence: 99%

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Cross-listing and the scope of the firm

Peng¹,

Su²

2014

Journal of World Business

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Abstract"What determines the scope of the firm?" is one of the most fundamental questions in strategic management and international business. Yet no previous research has investigated the relationship between the scope of the firm and cross-listing-a firm listing its stock on overseas exchanges. We leverage the resource-based and institution-based views with a focus on cross-listed firms from emerging economies. We predict that cross-listing may result in a narrower product scope in the short run, a wider product scope in the long run, an expanded geographic scope overall, and a higher propensity to engage in mergers and acquisitions in the host country.

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Section: Cross-listing and The Product Scope Of The Firmmentioning

confidence: 99%

Section: Cross-listing and The Product Scope Of The Firmmentioning

confidence: 99%

Section: Cross-listing and The Product Scope Of The Firmmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Cross-listing and the scope of the firm

Peng¹,

Su²

2014

Journal of World Business

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Sustainable development and the rating effects: A strategic categorization approach

Zeng

Xu²

2019

Corp Soc Responsibility Env

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With the increasing call for sustainable development, rating agencies of corporate sustainability performance (CSP) have got a good momentum of development all over the world. Different from past studies that utilize stakeholder theory or information economics in explaining rating effects, this study takes a strategic categorization approach to investigate firm responses to CSP ratings of a newly emerging rating agency. Using a sample of listed firms in Japan, our study finds that compared with firms with moderate CSP rating scores, firms with high or low rating scores are more likely to increase their corporate philanthropic contributions, and such an effect is strengthened when the firms have higher levels of foreign ownership. This study contributes to the literature by enriching our understanding of how the rating of a newly emerging rating agency shapes firms' sustainable activities.

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Categorizing the Liability of Foreignness: Ownership, Location, and Internalization‐Specific Dimensions

Zhou

Guillén

2016

Global Strategy Journal

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Plain language summary This study explains the different types of additional costs faced by multinational firms when they invest abroad. We identify product adaptation cost, discrimination cost, governance cost, and appropriation hazard as important sources of the difficulties that multinationals face. We then link each of these costs to different dimensions of cross‐national distance, including economic, cultural, demographic, political, and administrative distance. Finally, we show that the importance of these different distance dimensions differ when multinationals invest abroad for different reasons including market seeking, efficiency seeking, knowledge seeking, and natural resource seeking. Technical summary This study bridges the literature on the liability of foreignness (LoF) and cross‐national distance. Following the ownership‐location‐internalization paradigm, we categorize the LoF into three dimensions: ownership‐specific LoF, location‐specific LoF, and internalization‐specific LoF, each of which reduces a specific advantage of the multinational firm. We first define the three dimensions of the LoF and then argue that each dimension is related to different types of costs. We further explain that different types of costs are associated with different dimensions of cross‐national distance, and firms face different types of the LoF and associated costs when they conduct different types of foreign direct investment. We test these hypotheses in the context of Chinese listed firms investing abroad, finding support for most of the predictions. Copyright © 2016 Strategic Management Society

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The liability of foreignness in capital markets: Sources and remedies

Cited by 269 publications

References 137 publications

Cross-listing and the scope of the firm

Cross-listing and the scope of the firm

Sustainable development and the rating effects: A strategic categorization approach

Categorizing the Liability of Foreignness: Ownership, Location, and Internalization‐Specific Dimensions

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