Private Benefits of Control, Ownership, and the Cross-Listing Decision

Craig Doidge, G. Karolyi (), Karl Lins, Darius P. Miller and René Stulz

No 11162, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper investigates how a foreign firm's decision to cross-list its shares in the U.S. is related to the concentration of the ownership of its cash flow rights and of its control rights. Theory has proposed that when private benefits are high, controlling shareholders are less likely to choose to list their firm's shares in the U.S. because the higher standards for transparency and disclosure, as well as the increased monitoring associated with such listings, limit their ability to extract private benefits. We offer evidence that confirms this hypothesis using data on more than 4,000 firms from 31 countries. Using logistic regression analysis, we show that the control rights held by controlling shareholders, as well as the difference between their control rights and their cash flow rights are significantly and negatively related to the existence of a U.S. listing. In addition, we employ duration analysis using a Cox proportional-hazard model to show that the probability of listing in a given year from 1995 to 2001, conditional on not yet having listed, is significantly lower for firms whose managers have high levels of control and for firms whose controlling shareholder owns more control rights than cash flow rights.

JEL-codes: G15 G34 K00 P51 (search for similar items in EconPapers)
Date: 2005-03
New Economics Papers: this item is included in nep-bec and nep-law
Note: AP CF
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Citations: View citations in EconPapers (25)

Published as Doidge, Craig, G. Andrew Karolyi, Karl V.Lins, Darius P. Miller, and Rene M. Stulz. "Private Benefits of Control, Ownership, and the Cross-Listing Decision." Journal of Finance 64, 1 (February 2009): 425-66.

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Related works:
Journal Article: Private Benefits of Control, Ownership, and the Cross‐listing Decision (2009)
Working Paper: Private Benefits of Control, Ownership, and the Cross-Listing Decision (2005)
Working Paper: Private Benefits of Control, Ownership, and the Cross-Listing Decision (2005)
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