Equity cross-listings in the U.S. and the price of debt

Ryan T. Ball (), Luzi Hail () and Florin P. Vasvari ()
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Ryan T. Ball: University of Michigan
Luzi Hail: University of Pennsylvania
Florin P. Vasvari: London Business School

Review of Accounting Studies, 2018, vol. 23, issue 2, No 1, 385-421

Abstract: Abstract Using a large panel from 46 countries over 20 years, we find that non-U.S. firms issue corporate bonds more frequently and at lower offering yields following an equity cross-listing on a U.S. exchange. Firms issue more bonds through public offerings instead of private placements and in foreign markets rather than at home, in both cases at significantly lower yields. Moreover, the debt-related benefits are concentrated among firms domiciled in countries with less private benefits of control, efficient debt enforcement, and developed bond markets, suggesting that equity cross-listings cannot completely offset the impact of weak home country institutions. The results support the notion that the monitoring, transparency, and visibility benefits brought about by equity cross-listings on U.S. exchanges are valuable to bond investors.

Keywords: F34; G12; G15; G38; K22; Corporate governance; Bonding hypothesis; Debt financing; Disclosure; Law and finance; International accounting (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (8)

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DOI: 10.1007/s11142-017-9424-0

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