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1 – 10 of over 1000Min-Yu (Stella) Liao and Chris Tamm
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…
Abstract
Purpose
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 cross-listing firms.
Methodology
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
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
The corporate governance improvement firms recognize by cross-listing is partially offset by the reduced use of debt after the cross-listing. These governance characteristics may be especially relevant for shareholders in Level III cross-listings because those firms are actually raising addition cash.
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Shaw Chen, Bing-Xuan Lin, Yaping Wang and Liansheng Wu
The effectiveness of corporate governance is a major factor in forecasting firm performance. We examine the relationships among cross-listing, corporate governance and firm…
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.
In this paper, the authors examine the relation between cross-listing and the noncompliance with the mandatory corporate social responsibility (CSR) expenditure regulation in…
Abstract
Purpose
In this paper, the authors examine the relation between cross-listing and the noncompliance with the mandatory corporate social responsibility (CSR) expenditure regulation in India, the first country to legally mandate the CSR expenditure.
Design/methodology/approach
The authors apply panel logit and ordinary least square (OLS) regression models to examine the impact of cross-listing on the noncompliance with the mandatory CSR expenditure regulation because panel regression has lesser multicollinearity problems and has the benefit of controlling for individual or time heterogeneity mostly present in cross-section or time series data.
Findings
Using a sample of 1,027 listed Indian firms, the authors show that the cross-listed firms are more likely to comply with the mandatory CSR expenditure than non-cross-listed firms. The authors further show that this relation holds only for those firms which are exposed to higher agency problems, for firms affiliated to business groups and for firms operating in high litigation risk industries. Finally, the authors show that cross-listed firms complying with the mandatory CSR expenditure command more valuation premiums.
Practical implications
This study’s results suggest that the noncompliance of the Indian firms with the mandatory CSR expenditure regulation comes down once they cross-list their shares in the US or the UK since such firms have to bond to the stronger corporate governance standards of the listed country. Hence, the authors recommend that merely making the investment in CSR activities mandatory may not serve the purpose and the convergence in corporate governance as well as compliance with the CSR expenditure can be achieved through cross-listing in US and UK markets.
Originality/value
One, the authors analyze the effect of cross-listing on the likelihood and magnitude of noncompliance with the CSR mandate. Two, this study is based in India where CSR expenditure has been made mandatory under the Companies Act, 2013. Using CSR mandate as a natural experiment, the authors have access to a richer data set on CSR in terms of the actual expenditure made by the company on CSR activities and the mandatory amount to be spent in a particular year.
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Shallu Batra, Mohit Saini, Mahender Yadav and Vaibhav Aggarwal
This study aims to conduct a comprehensive bibliometric analysis to determine the intellectual structure of cross-listing studies and suggests a road map for future research in…
Abstract
Purpose
This study aims to conduct a comprehensive bibliometric analysis to determine the intellectual structure of cross-listing studies and suggests a road map for future research in this field.
Design/methodology/approach
A step-by-step procedure was carried out. With the help of a defined search string, 580 articles from reputed journals have been retrieved from the Scopus database. Bibliographic coupling and keyword analysis were executed to understand the current research scenario and future research directions in this research field. In addition, R Studio combined with VOSviewer was employed to analyse and visualise the data.
Findings
The results provide a deeper insight into publication trends, most prolific countries, institutions and journals in the area of cross-listing. The highest collaboration was observed between the authors in the USA and Canada. Moreover, the results contradict Bradford's and Lotka's laws. A thorough review of the literature identifies five clusters in this domain. Finally, keyword analysis offers a future road map in cross-listing research.
Originality/value
Researchers have shown greater interest in cross-listing topics over the past decades. Even though the research volume on this subject is increasing, the current retrospective is still insufficient. To the best of the authors' knowledge, this study is the first to provide valuable insights to practitioners, academicians, and prospective researchers about the intellectual structure of cross-listing and also offers future avenues in this research field through bibliometric analysis.
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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.
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The purpose of this paper is to investigate the effect of cross-listing on the size and structure of director compensation at individual director level. While much of the prior…
Abstract
Purpose
The purpose of this paper is to investigate the effect of cross-listing on the size and structure of director compensation at individual director level. While much of the prior literature has focused on executive compensation, more recent literature has started to examine director compensation. Additionally, there has been extensive literature examining the impact of cross-listing on the corporate governance and equity valuation of listed firms. The literature, however, has largely ignored the effect of cross-listing on director compensation schemes. This study attempts to combine these two literature streams and examine the effect of cross-listing on director compensation.
Design/methodology/approach
This study uses American Depository Receipts (ADRs) and matched non-ADRs from the same country and industry to test the relationship between cross-listing and director compensation. Regressions with country, year and industry fixed-effects are employed. The relationship is further examined using only ADR firms during pre-listing and post-listing periods.
Findings
This study finds that directors of ADR firms receive higher total compensation and greater percentage equity-based compensation relative to directors of non-ADR firms. This study also finds that such differences in director compensation are dependent on the cross-listing program a firm is registered to. Directors of ADR firms also receive higher total compensation and greater percentage equity-based compensation during post-listing periods relative to their own compensation during pre-listing periods.
Originality/value
This study extends the literature on director compensation in a global setting, and is the first to examine an unanswered question regarding the effect of cross-listing on director compensation. This study provides important information that cross-listing affects the size and structure of director compensation between ADR and non-ADR firms, as well as between pre-listing and post-listing periods for ADR firms themselves.
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Zhou Jian, Zhang Tingting and Cui Shengchao
The purpose of this paper is to explore whether corporate governance is the intermediary between the cross listing strategy and corporate performance.
Abstract
Purpose
The purpose of this paper is to explore whether corporate governance is the intermediary between the cross listing strategy and corporate performance.
Design/methodology/approach
The paper first reviews the studies on cross listing and corporate governance, and then constructs the theoretical model to express the relationship between cross listing, corporate governance, and corporate performance. Then, the paper takes the regression test and mediating effects test with the companies listed in Hong Kong as the sample.
Findings
Empirical studies found that corporate governance is the intermediary between the cross listing strategy and corporate performance. Meanwhile, the study verified that cross listing strategy does enhance corporate performance.
Originality/value
The finding will help Chinese corporations choose another way to be international and practise the strategy of cross listing.
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Kim Hin David Ho, Kwame Addae-Dapaah and Fang Rui Lina Peck
The purpose of this paper is to examine the common stock price reaction and the changes to the risk exposure of the cross-listing for real estate investment trusts (REITs).
Abstract
Purpose
The purpose of this paper is to examine the common stock price reaction and the changes to the risk exposure of the cross-listing for real estate investment trusts (REITs).
Design/methodology/approach
The paper adopts the event study methodology to assess the abnormal returns (ARs). Pre- and post-cross-listing changes in the risk exposure for the domestic and foreign markets are examined, via a modified two-factor international asset pricing model. A comparison is made for two broad cross-listings, namely, the depositary receipts and the dual ordinary listings, to examine the impacts from institutional differences.
Findings
Cross-listed REITs generally experience positive and significant ARs throughout the event window, implying significant superior returns associated with the cross-listing for REITs. On systematic risks, REITs exhibit significant decline in their domestic market β coefficients after the cross-listing. However, the foreign market β coefficients do not yield conclusive evidence when compared across the sample.
Research limitations/implications
Results are consistent with prudential asset allocation for potential diversification gains from the cross-listing, as the reduction from the domestic market beta is more significant than changes in the foreign market beta.
Practical implications
The results and findings should incentivise REIT managers to explore viable cross-listing.
Social implications
Such cross-listing for REITs should enhance risk diversification.
Originality/value
This is a pioneer study on cross-listing of REITs. It provides a basis for investment decision making, and could provoke further research and discussion.
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Li Li Eng and Qianhua (Q) Ling
The purpose of this paper is to examine whether both country disclosure environment and firm‐level disclosures are associated with cross‐listing in the USA or London or otherwise.
Abstract
Purpose
The purpose of this paper is to examine whether both country disclosure environment and firm‐level disclosures are associated with cross‐listing in the USA or London or otherwise.
Design/methodology/approach
The authors test the association using a sample of Asia‐Pacific firms covered in the Standard and Poor's, 2001/2002 disclosure survey, capturing the country‐level disclosure using the Center for International Financial Analysis and Research (CIFAR) score. The firm‐level disclosure is measured using the S&P disclosure score. The authors conduct a logistic regression analysis and a two‐stage least squares analysis to examine whether the outcome, cross‐listing or not, is associated with the country disclosure environment and firm‐level disclosures.
Findings
The authors find that Asia‐Pacific firms from weak disclosure environments and having higher firm‐level disclosure scores are more likely to seek listing in the USA. Further, the paper provides initial evidence that these Asia‐Pacific firms are as likely to seek listing in London as in the USA. No significant difference was found in S&P scores between US and London cross‐listings after controlling for the effects of other variables. This suggests that firms that cross‐list in London present similar disclosure levels to firms that cross‐list in the USA.
Originality/value
The paper's findings contribute to the cross‐listing literature on disclosure by showing that the interaction between firm‐level disclosure and country‐level disclosure has an impact on whether a firm cross‐lists in the USA/London or not. The authors' comparison of US cross‐listings versus London cross‐listings provides the first evidence that disclosures of US and London cross‐listings are not significantly different.
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Min-Yu (Stella) Liao and Stephen Ferris
When a foreign firm cross-lists on an exchange in the US, it signals stronger investor protection. This is because cross-listing firms must comply with SEC and exchange…
Abstract
Purpose
When a foreign firm cross-lists on an exchange in the US, it signals stronger investor protection. This is because cross-listing firms must comply with SEC and exchange regulations, thus producing stronger corporate governance. Consequently, cross-listing increases firm attractiveness to investors and places domestic rivals at a disadvantage. Rivals might respond by mimicking the governance changes resulting from cross-listing. The purpose of this paper is to examine whether firms respond to their rivals’ cross-listings through improvement in governance.
Design/methodology/approach
This study uses earnings management as a measure of governance for a set of international firms. The authors track the changes in governance of non-cross-listing firms following their rivals’ cross-listings. The authors employ an event study methodology to assess the spillover effect of a competitor’s cross-listing.
Findings
The authors find that rivals exhibit imitative improvements in their governance following a competitor’s cross-listing. This response is immediate and is the strongest in the year of cross-listing. Further, rivals with greater growth opportunities, lower market share, stronger past performance, and larger size demonstrate greater improvements in governance. Rivals make greater improvements in response to more rigorous Level III listings.
Practical implications
This study finds that cross-listing effects are underestimated. It is not only the investors of the listing-firms who benefit from the cross-listing, but also the investors of non-listing rival as competitors try to match the higher governance standard.
Originality/value
This study is the first that examines the intra-industry spillover effect of a cross-listing. This study also expands the analysis of the spillover effect in a new dimension: corporate governance.
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