Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7360574 | Journal of Empirical Finance | 2018 | 55 Pages |
Abstract
Cross-listing on a US exchange does not force foreign firms to follow the exchange's corporate governance rules. Hand-collected data show that 80% of cross-listed firms opt out of at least one exchange governance rule and those that opt out have a smaller share of independent directors. Cross-listed firms opt out more when coming from countries with weak corporate governance rules, but if these firms are growing and need external financing, they are more likely to comply. For firms in such countries, opting out also lowers firm valuations, decreases the value of cash holdings, and reduces investment sensitivity to market valuations.
Related Topics
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Economics and Econometrics
Authors
C. Fritz Foley, Paul Goldsmith-Pinkham, Jonathan Greenstein, Eric Zwick,