Does Cross-Listing Lead to Functional Convergence? Empirical Evidence
The author examines the effect of legal bonding on ownership and control structures of foreign firms cross-listing in the United States. Contrary to the predictions of corporate governance convergence theories, there is little evidence of convergen...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2004/03/3573367/cross-listing-lead-functional-convergence-empirical-evidence http://hdl.handle.net/10986/14302 |
| Summary: | The author examines the effect of legal
bonding on ownership and control structures of foreign firms
cross-listing in the United States. Contrary to the
predictions of corporate governance convergence theories,
there is little evidence of convergence-related migration to
a dispersed ownership structure on cross-listing. She finds
that rather than as a means to change their governance
structure, foreign firms use American Depository Receipts as
a vehicle to sell control blocks, often to a new foreign
owner. Firms that cross-list and sell stakes to domestic
owners are from large economies with high stock market
liquidity. In contrast, firm-level characteristics are more
important predictors of a control change to a foreign owner.
Cross-listing firms that sell control blocks to foreigners
tend to be smaller, have low levels of debt, and have a high
foreign income growth rate. The post cross-listing
performance of firms that undergo a control change is also
different from firms that do not experience a control change. |
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