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Do Political Institutions Affect the Choice of the U.S. Cross-Listing Venue?

Author

Listed:
  • Jean-Claude Cosset
  • Charles Martineau
  • Anis Samet

Abstract

We study the impact of political institutions on foreign firms’ choice of their U.S. cross-listing venue. Using two measures of political institutions (an index of political rights and a political constraint index) and controlling for various firm-level and country-level characteristics, we show that foreign firms from countries with weak political institutions are more likely to cross-list in the U.S. via the over-the-counter market and less likely to opt for an exchange-listed program (i.e., New York, Nasdaq, and AMEX).

Suggested Citation

  • Jean-Claude Cosset & Charles Martineau & Anis Samet, 2012. "Do Political Institutions Affect the Choice of the U.S. Cross-Listing Venue?," Cahiers de recherche 1210, CIRPEE.
  • Handle: RePEc:lvl:lacicr:1210
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    File URL: http://www.cirpee.org/fileadmin/documents/Cahiers_2012/CIRPEE12-10.pdf
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    References listed on IDEAS

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    1. Marco Pagano & Ailsa A. Röell & Josef Zechner, 2002. "The Geography of Equity Listing: Why Do Companies List Abroad?," Journal of Finance, American Finance Association, vol. 57(6), pages 2651-2694, December.
    2. Qi, Yaxuan & Roth, Lukas & Wald, John K., 2010. "Political rights and the cost of debt," Journal of Financial Economics, Elsevier, vol. 95(2), pages 202-226, February.
    3. Mark J. Roe & Jordan I. Siegel, 2009. "Finance and Politics: A Review Essay Based on Kenneth Dam's Analysis of Legal Traditions in The Law-Growth Nexus," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 781-800, September.
    4. Campbell, John Y, 1996. "Understanding Risk and Return," Journal of Political Economy, University of Chicago Press, vol. 104(2), pages 298-345, April.
    5. Ugur Lel & Darius P. Miller, 2008. "International Cross-Listing, Firm Performance, and Top Management Turnover: A Test of the Bonding Hypothesis," Journal of Finance, American Finance Association, vol. 63(4), pages 1897-1937, August.
    6. repec:hrv:faseco:30747160 is not listed on IDEAS
    7. Roe, Mark J. & Siegel, Jordan I., 2011. "Political instability: Effects on financial development, roots in the severity of economic inequality," Journal of Comparative Economics, Elsevier, vol. 39(3), pages 279-309, September.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Karolyi, G. Andrew, 2012. "Corporate governance, agency problems and international cross-listings: A defense of the bonding hypothesis," Emerging Markets Review, Elsevier, vol. 13(4), pages 516-547.

    More about this item

    Keywords

    Cross-listing; Political institutions; Legal institutions;

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • 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
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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