Cross-listing performance and insider ownership: The experience of U.S. investors

•Insider-owned firms pursue U.S. cross-listings following periods of extraordinary performance.•The long-run post-cross-listing abnormal returns turn negative for insider-controlled firms.•The Sarbanes–Oxley Act has mitigated the attempts to time the cross-listing market.•The returns of capital-raising firms are more sensitive to potential agency problems.

Insider-owned firms pursue U.S. cross-listings following periods of extraordinary performance. However, the long-run post-cross-listing abnormal returns become negative only for insider-controlled cross-listings. We find that the Sarbanes–Oxley Act (SOX) has mitigated the market-timing attempts as negative abnormal returns are limited to the pre-SOX period, supporting a cross-listing bonding benefit after U.S. securities regulation was enhanced. In addition, investors anticipate future operating performance as stock returns incorporate forthcoming operating outcomes one and two years ahead. Whereas capital-raising cross-listings show better operating performance than non-capital-raising, the returns of capital-raising firms are more sensitive to the potential agency problems created by insider-ownership.