The impact of cross-delisting from the U.S. On firms’ financial constraints

Gilberto Loureiro and Sónia Silva

Journal of Business Research, 2020, vol. 108, issue C, 132-146

Abstract: We investigate the impact of cross-delisting on firms’ financial constraints. We find that firms that cross-delisted from a U.S. stock exchange face stronger post-delisting financial constraints than their cross-listed counterparts, as measured by investment-to-cash flow and cash-to-cash flow sensitivities. Following a delisting, the sensitivity of investment to cash flow increases significantly, and firms also tend to save more cash out of cash flows. These effects are mainly driven by cross-delisted firms from countries with weaker investor protection and are more predominant after the passage of Rule 12 h-6 (of 2007), which made it easier for foreign firms to leave U.S. markets.

Keywords: Cross-delisting; Financial constraints; Information asymmetry; Investment-to-cash flow sensitivity; Cash-to-cash flow sensitivity (search for similar items in EconPapers)
JEL-codes: F30 F31 G15 G30 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:108:y:2020:i:c:p:132-146

DOI: 10.1016/j.jbusres.2019.09.055

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