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Controlling shareholders and market timing: Evidence from cross-listing events

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  • Esqueda, Omar A.

Abstract

We find partial support for a permanent increase in firm value following U.S. cross-listings. Cross-listed firms with capital-raising intentions on U.S. exchanges and firms cross-listing after the Sarbanes-Oxley Act exhibit an increase in firm value. Yet, investors are worse off in the long run when owning insider-controlled cross-listings. Compared to non-insider-owned cross-listings, insider-owned firms have a greater rise in value around the cross-listing year but also a larger decline in the post-cross-listing years. In fact, insider-owned firms lose value by the fifth year, compared with their value before cross-listing. Lastly, we show that liquidity and visibility enhance the value of cross-listings.

Suggested Citation

  • Esqueda, Omar A., 2017. "Controlling shareholders and market timing: Evidence from cross-listing events," International Review of Financial Analysis, Elsevier, vol. 49(C), pages 12-23.
    • Handle: RePEc:eee:finana:v:49:y:2017:i:c:p:12-23
    DOI: 10.1016/j.irfa.2016.11.008
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    Cited by:

    1. Ghadhab, Imen & M’rad, Mouna, 2018. "Does US cross-listing come with incremental benefit for already UK cross-listed firms," The Quarterly Review of Economics and Finance, Elsevier, vol. 69(C), pages 188-204.
    2. Tunyi, Abongeh A. & Agyei-Boapeah, Henry & Areneke, Geofry & Agyemang, Jacob, 2019. "Internal capabilities, national governance and performance in African firms," Research in International Business and Finance, Elsevier, vol. 50(C), pages 18-37.
    3. Esqueda, Omar A. & O’Connor, Thomas, 2020. "Corporate governance and life cycles in emerging markets," Research in International Business and Finance, Elsevier, vol. 51(C).
    4. Ghadhab, Imen, 2021. "Cross-listing and the alignment between short and long-run performance," Journal of Multinational Financial Management, Elsevier, vol. 62(C).
    5. Yang, Ann Shawing & Carandang, Craig Alan Uyan, 2017. "Exploring the location and price differentials of cross-listed firms for arbitrage opportunities," Finance Research Letters, Elsevier, vol. 21(C), pages 85-91.
    6. Awadh Saeed Bin-Dohry & Hanita Kadir Shahar & Sharmilawati Sabki & David McMillan, 2021. "The determinants of dual listing decision of firms from ASEAN-5," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1917105-191, January.
    7. Jonathan Batten & Xuan Vinh Vo, 2019. "Liquidity And Firm Value In An Emerging Market," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(02), pages 365-376, March.
    8. Li, Bin & Liang, Yilan & Shahab, Yasir & Gull, Ammar Ali & Ashraf, Naeem, 2022. "Parent-subsidiary dispersion, cost of debt and debt default: Evidence from China," Economic Modelling, Elsevier, vol. 107(C).
    9. Abdallah, Abed AL-Nasser & Abdallah, Wissam, 2019. "Does cross-listing in the US improve investment efficiency? Evidence from UK firms," The Quarterly Review of Economics and Finance, Elsevier, vol. 72(C), pages 215-231.

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    More about this item

    Keywords

    Cross-listings; Market timing; Insider ownership; Firm value; Bonding hypothesis; Tobin's q; Sarbanes-Oxley;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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