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Controlling shareholders and market timing: Evidence from cross-listing events

Omar A. Esqueda

International Review of Financial Analysis, 2017, vol. 49, issue C, 12-23

Abstract: We find partial support for a permanent increase in firm value following U.S. cross-listings. Cross-listed firms with capital-raising intentions on U.S. exchanges and firms cross-listing after the Sarbanes-Oxley Act exhibit an increase in firm value. Yet, investors are worse off in the long run when owning insider-controlled cross-listings. Compared to non-insider-owned cross-listings, insider-owned firms have a greater rise in value around the cross-listing year but also a larger decline in the post-cross-listing years. In fact, insider-owned firms lose value by the fifth year, compared with their value before cross-listing. Lastly, we show that liquidity and visibility enhance the value of cross-listings.

Keywords: Cross-listings; Market timing; Insider ownership; Firm value; Bonding hypothesis; Tobin's q; Sarbanes-Oxley (search for similar items in EconPapers)
JEL-codes: G30 G32 G34 (search for similar items in EconPapers)
Date: 2017
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