Cross-listing, corporate governance and operating performance – evidence from The Chinese market

Abstract

The effectiveness of corporate governance is a major factor in forecasting firm performance. We examine the relationships among cross-listing, corporate governance and firm performance for a sample of Chinese cross-listed companies. We show that cross-listed firms display higher overall quality of corporate governance compared to non-cross-listed firms. Consequently better corporate governance results in higher operating performance. Our results support the bonding hypothesis of cross-listing. Furthermore, we also illustrate that the cross-listing status encapsulates the higher quality of corporate governance that leads to higher operating performance. When forecasting performance of cross-listing companies, it is therefore important to recognize the substitute effect between cross-listing and corporate governance.

Citation

Chen, S., Lin, B.-X., Wang, Y. and Wu, L. (2008), "Cross-listing, corporate governance and operating performance – evidence from The Chinese market", Lawrence, K.D. and Geurts, M.D. (Ed.) Advances in Business and Management Forecasting (Advances in Business and Management Forecasting, Vol. 5), Emerald Group Publishing Limited, Leeds, pp. 19-46. https://doi.org/10.1016/S1477-4070(07)00202-4