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The Impact of Local Governance Institutions on Foreign Market Listings: The Case of Chinese Firms

  • Abigail S. Hornstein

    ()

    (Department of Economics, Wesleyan University)

This paper exploits the substantial variation in market institutions across provinces in China to examine the impact of institutional quality on foreign listing. Firms that list on the U.S. and U.K. exchanges are more likely to come from better regulated provinces and tend to be at the top of a corporate pyramid. However, though the impact on firm performance of market institutions and pyramidal affiliations persists briefly post-listing with firms recording lower EPS and higher raw returns in the first year, it does not help predict whether firms remain listed abroad in 2012. Thus, we conclude that headquarters’ market institutions shape a firm through time of listing and have diminished influence over time.

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File URL: http://repec.wesleyan.edu/pdf/ahornstein/2013006_hornstein.pdf
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Paper provided by Wesleyan University, Department of Economics in its series Wesleyan Economics Working Papers with number 2013-006.

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Length: 57 pages
Date of creation: Sep 2013
Date of revision:
Handle: RePEc:wes:weswpa:2013-006
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