Cross-listings, antitakeover defenses, and the insulation hypothesis

Albert Tsang, Nan Yang and Lingyi Zheng

Journal of Financial Economics, 2022, vol. 145, issue 1, 259-276

Abstract: This paper tests a theory conjecturing that cross-listing can insulate firms from potential hostile takeovers owing to the increased cost concern of bidders. We find a significant and positive relation between the corporate control threat and the likelihood that firms cross-list in a foreign country. Firms facing takeover threats are more likely to choose hosting countries with greater accounting differences from the US GAAP. Subsample evidence suggests that cross-listing is more likely to be used as an antitakeover device if firms have foreign market exposure or when all-cash offers are less likely. Tests based on quasi-natural experiments provide further support.

Keywords: Cross-listing; Takeover deterrent; Poison pills (search for similar items in EconPapers)
JEL-codes: G15 G34 G38 K22 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:145:y:2022:i:1:p:259-276

DOI: 10.1016/j.jfineco.2021.08.003

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