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Cross listing and firm value - corporate governance or market segmentation? An empirical study of the stock market

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Author Info
Ji, Gang () (BOFIT)
Abstract

This study investigates the economic consequences of cross-listing on the Chinese stock market. We argue that by adopting a higher disclosure standard through cross- listing firms voluntarily commit themselves to reducing information asymmetry. As a result, cross-listed firms are able to benefit from growth opportunities with less appropriated cash flow and lower cost of capital. The empirical evidence shows that cross-listed firms indeed command higher valuations than their non-cross-listed counterparts, after controlling for certain firm-specific attributes. This lends support to the corporate governance hypothesis of cross-listing on the Chinese stock market. The study also argues that an overall upgrad-ing of accounting standards cannot substitute for the cross-listing mechanism.

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Publisher Info
Paper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 14/2005.

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Length: 36 pages
Date of creation: 11 Nov 2005
Date of revision:
Handle: RePEc:hhs:bofitp:2005_014

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Keywords: corporate governance listing China

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References listed on IDEAS
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    Other versions:
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