Overcoming the liability of origin: cross-listing in developed economies as a signal
International Journal of Emerging Markets
ISSN: 1746-8809
Article publication date: 14 March 2022
Issue publication date: 5 December 2023
Abstract
Purpose
The purpose of this paper is to investigate the role of cross-listing in overcoming liability of origin (LOO) facing emerging economy corporations (EECs).
Design/methodology/approach
This paper takes Chinese firms' cross-listing in Hong Kong and the firms' establishment of international joint ventures (IJVs) with foreign partners as the research setting. This is an empirical study using Heckman's self-selection model as the primary econometric technique and two-stage least square (2SLS) regressions as the supplementary estimation procedure.
Findings
Cross-listing in developed economies can serve as a signal for EECs to overcome the LOO. In addition, the regional institutional voids of emerging economies (EEs) and state ownership are prominent boundary conditions shaping this effect.
Research limitations/implications
Only Chinese firms and the firms' cross-listing in Hong Kong are considered for the empirical context as a result of data availability.
Practical implications
This paper provides a practical solution for EECs whose internationalisation tends to be hindered by the LOO.
Originality/value
This study is of high importance in that it centres on a distinctive and challenging problem faced with EECs—the LOO. Besides, it ascribes this liability to a matter of information asymmetries and explores how cross-listing can serve as a signal to cope with this challenge.
Keywords
Acknowledgements
Conflicts of interest/Competing interests: None
Funding: This study is supported by National Natural Science Foundation of China, 72091310; 72091312; 71732008 and Soft Science Research in Anhui Province, 202106f01050052.
Citation
Wei, J., Zheng, J. and Zuo, Y. (2023), "Overcoming the liability of origin: cross-listing in developed economies as a signal", International Journal of Emerging Markets, Vol. 18 No. 11, pp. 5319-5337. https://doi.org/10.1108/IJOEM-01-2021-0111
Publisher
:Emerald Publishing Limited
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