Investor Protection, Investment Efficiency and Value: The Case of Cross-Listed Firms

Chinmoy Ghosh and Fan He

Financial Management, 2015, vol. 44, issue 3, 499-546

Abstract: type="main">

We examine the impact of improved investor protection due to cross-listing on foreign firms’ investment decisions and firm value. While we find that cross-listing increases firms’ capital expenditures and mergers and acquisitions activities, cross-listed firms also invest more in research and development, make better acquisition decisions, and have higher profitability compared to non-cross-listed firms. Moreover, cross-listing is associated with better cash utilization by foreign firms for investments. These improvements in investments and cash utilization are more pronounced for firms cross-listed on US exchanges and for firms from countries with weak investor protection laws.

Date: 2015
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