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Foreign cultures, Sarbanes-Oxley Act and cross-delisting

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Listed author(s):
  • Daugherty, Mary
  • Georgieva, Dobrina
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    Abstract

    Using a sample of foreign firms listed in U.S. and delisting shares over the period 2000 and 2010, this paper studies the impact of Sarbanes-Oxley Act (SOX) on the cross-delisting behavior of foreign firms based on the firm characteristics, legal tradition, overall culture and degree of individualism of the country of domicile. Pre-SOX, the propensity to delist is lower for firms from countries with cultural similarities to the U.S. and higher for firms from individualistic societies. Post-SOX these trends are reversed. Consistent with the existing research we find that the delisting decision of foreign firms cross-listed in the U.S. is based on the potential gains from listing based on the growth opportunities, length of presence in the U.S. and legal regulations of the country of domicile. Out findings provide evidence of the cultural factors that impact the competitiveness of U.S. capital markets.

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    File URL: http://www.sciencedirect.com/science/article/pii/S1042444X1100034X
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    Article provided by Elsevier in its journal Journal of Multinational Financial Management.

    Volume (Year): 21 (2011)
    Issue (Month): 4 (October)
    Pages: 208-223

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    Handle: RePEc:eee:mulfin:v:21:y:2011:i:4:p:208-223
    Contact details of provider: Web page: http://www.elsevier.com/locate/mulfin

    Keywords: ADRs Sarbanes-Oxley Act Delisting Individualism Hofstede cultural dimensions;

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    Cited by:

    1. Georgieva, Dobrina & Jandik, Tomas, 2012. "Alternative paths of convergence toward U.S. market and legal regulations: Cross-listing vs. merging with U.S. bidders," Journal of Multinational Financial Management, Elsevier, vol. 22(5), pages 230-251.
    2. Gilberto Loureiro & Sónia Silva, "undated". "Post-Operating Performance of Cross-Delisted Firms From U.S. Stock Exchanges," NIPE Working Papers 17/2015, NIPE - Universidade do Minho.

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