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The cost of cross-border listing: Evidence from the Holding Foreign Companies Accountable Act

Author

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  • Fu, Renhui
  • Gao, Fang
  • Wang, Yanhui
  • Zhou, Huimin

Abstract

In 2020, the U.S. enacted the Holding Foreign Companies Accountable Act (HFCAA), requiring U.S.-listed foreign firms to submit audit working papers and verify the absence of government control, with delisting as a penalty for noncompliance. Using an event study approach, we document significantly negative stock market reactions to HFCAA legislative events among U.S.-listed Chinese firms. The effects are more pronounced for data-sensitive firms and state-owned enterprises, as well as for firms listed only in the United States and those facing larger financing constraints. Overall, our findings show that cross-border listing can impose significant regulatory costs stemming from cross-border enforcement frictions.

Suggested Citation

  • Fu, Renhui & Gao, Fang & Wang, Yanhui & Zhou, Huimin, 2026. "The cost of cross-border listing: Evidence from the Holding Foreign Companies Accountable Act," Economics Letters, Elsevier, vol. 266(C).
    • Handle: RePEc:eee:ecolet:v:266:y:2026:i:c:s0165176526002338
    DOI: 10.1016/j.econlet.2026.113039
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    Keywords

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    JEL classification:

    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance
    • K2 - Law and Economics - - Regulation and Business Law

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