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An Economic Analysis of Cross-Listing Decisions and Their Impact on Earnings Quality

Author

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  • Roland Königsgruber

Abstract

I examine the conditions under which entrepreneurs signal the high quality of their projects by cross-listing their firms in a jurisdiction with stricter enforcement of financial reporting regulation. I analyze the effect of these cross-listing decisions on international earnings quality, using a model of earnings management and financial reporting enforcement in which stricter enforcement makes accounting manipulation more costly. The analysis shows that firms can use cross-listing decisions to signal high quality projects even in the absence of listing costs. Cross-listing to a jurisdiction with stricter enforcement sometimes actually increases earnings management and generally leads to less earnings management among firms remaining in the domestic market.

Suggested Citation

  • Roland Königsgruber, 2009. "An Economic Analysis of Cross-Listing Decisions and Their Impact on Earnings Quality," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 61(3), pages 310-330, July.
    • Handle: RePEc:sbr:abstra:v:61:y:2009:i:3:p:310-330
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    Cited by:

    1. Bert Scholtens & Feng‐Ching Kang, 2013. "Corporate Social Responsibility and Earnings Management: Evidence from Asian Economies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 20(2), pages 95-112, March.

    More about this item

    Keywords

    Analytical Accounting; Cross-Listing; Earnings Management; Earnings Quality; Enforcement;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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