Spillover Effect of Cross‐Listings: Evidence From Corporate Social Responsibility

Using a large sample of US firms that cross‐listed their securities in foreign countries, we find that the non‐cross‐listing firms tend to improve their corporate social responsibility (CSR) performance in response to their peers’ cross‐listing decision. Moreover, our results show that the significant finding is primarily driven by non‐cross‐listing firms with peers cross‐listed in foreign countries with higher levels of CSR awareness relative to that of the United States following their peers’ cross‐listing decision. We further find a positive relationship between non‐cross‐listing firms’ CSR performance and the proportion of cross‐listing firms in a region or an industry. This relationship is more (less) pronounced for leading (non‐leading) non‐cross‐listing firms in the same region or industry. Overall, our findings lend support to the argument that firms’ decision to cross‐list has a positive spillover effect on their non‐cross‐listing peers’ CSR performance and ultimately can improve stakeholders’ welfare in general.