Overcoming the liability of origin: cross-listing in developed economies as a signal

Jiang Wei, Jie Zheng and Yan Zuo

International Journal of Emerging Markets, 2022, vol. 18, issue 11, 5319-5337

Abstract: Purpose - The purpose of this paper is to investigate the role of cross-listing in overcoming liability of origin (LOO) facing emerging economy corporations (EECs). Design/methodology/approach - This paper takes Chinese firms' cross-listing in Hong Kong and the firms' establishment of international joint ventures (IJVs) with foreign partners as the research setting. This is an empirical study using Heckman's self-selection model as the primary econometric technique and two-stage least square (2SLS) regressions as the supplementary estimation procedure. Findings - Cross-listing in developed economies can serve as a signal for EECs to overcome the LOO. In addition, the regional institutional voids of emerging economies (EEs) and state ownership are prominent boundary conditions shaping this effect. Research limitations/implications - Only Chinese firms and the firms' cross-listing in Hong Kong are considered for the empirical context as a result of data availability. Practical implications - This paper provides a practical solution for EECs whose internationalisation tends to be hindered by the LOO. Originality/value - This study is of high importance in that it centres on a distinctive and challenging problem faced with EECs—the LOO. Besides, it ascribes this liability to a matter of information asymmetries and explores how cross-listing can serve as a signal to cope with this challenge.

Keywords: Liability of origin; Signalling theory; Stereotype; Cross-listing; Institutional voids (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijoemp:ijoem-01-2021-0111

DOI: 10.1108/IJOEM-01-2021-0111

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