This paper investigates how a foreign firm's decision to cross-list its shares in the U.S. is related to the concentration of the ownership of its cash flow rights and of its control rights. Theory has proposed that when private benefits are high, controlling shareholders are less likely to choose to list their firm's shares in the U.S. because the higher standards for transparency and disclosure, as well as the increased monitoring associated with such listings, limit their ability to extract private benefits. We offer evidence that confirms this hypothesis using data on more than 4,000 firms from 31 countries. Using logistic regression analysis, we show that the control rights held by controlling shareholders, as well as the difference between their control rights and their cash flow rights are significantly and negatively related to the existence of a U.S. listing. In addition, we employ duration analysis using a Cox proportional-hazard model to show that the probability of listing in a given year from 1995 to 2001, conditional on not yet having listed, is significantly lower for firms whose managers have high levels of control and for firms whose controlling shareholder owns more control rights than cash flow rights.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
11162.
Length: Date of creation: Mar 2005 Date of revision: Handle: RePEc:nbr:nberwo:11162
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Find related papers by JEL classification: G15 - Financial Economics - - General Financial Markets - - - International Financial Markets G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance K00 - Law and Economics - - General - - - General (including Data Sources and Description) P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
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"Law and Finance,"
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Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1996.
"Law and Finance,"
NBER Working Papers
5661, National Bureau of Economic Research, Inc.
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Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 1999.
"Corporate Ownership Around the World,"
Journal of Finance,
American Finance Association, vol. 54(2), pages 471-517, 04.
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