An Economic Analysis of Cross-Listing Decisions and Their Impact on Earnings Quality
AbstractI 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.
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Bibliographic InfoArticle provided by LMU Munich School of Management in its journal Schmalenbach Business Review.
Volume (Year): 61 (2009)
Issue (Month): 3 (July)
Analytical Accounting; Cross-Listing; Earnings Management; Earnings Quality; Enforcement;
Find related papers by JEL classification:
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
- M48 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Government Policy and Regulation
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