The Role of Political Stability, Government Effectiveness and Voice and Accountability on Cross-Listing Destination Premium: Evidence of BRICS Firms

Adebiyi Sunday Adeyanju (), Edson Vengesai, Joseph Olorunfemi Akande and Paul-Francois Muzindutsi
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Adebiyi Sunday Adeyanju: School of Accounting, Economics and Finance, University of KwaZulu-Natal, Durban 4041, South Africa
Edson Vengesai: Department of Economics and Finance, University of the Free State, Bloemfontein 9031, South Africa
Joseph Olorunfemi Akande: Department of Accounting and Taxation, Walter Sisulu University, Mthatha 5117, South Africa
Paul-Francois Muzindutsi: School of Accounting, Economics and Finance, University of KwaZulu-Natal, Durban 4041, South Africa

Businesses, 2025, vol. 5, issue 4, 1-31

Abstract: While international cross-listing locations in host countries have been identified as integral to firm valuation gains, the influence of the home country information environment on firm financial market integration remains underexplored. This study examined how political stability, government effectiveness, and voice and accountability influence cross-listing destination choices amongst emerging-market firms seeking enhanced valuation gains. Using data on cross-listed firms from BRICS countries between 2000 and 2020, the study employed generalized linear models (GLMs), including probit and robit specifications, to analyze this relationship. The researchers found that stronger political stability; government effectiveness; and voice and accountability in home countries significantly increase the likelihood of BRICS firms cross-listing on advanced exchanges characterized by higher valuation gains. These results indicate that reduced political risk, effective government policy implementation and greater media freedom in BRICS emerging market countries facilitate cross-listing firms’ access to more efficient global capital markets by reducing asymmetric information, and help overcome traditional market segmentation barriers. Contrary to the conventional emphasis that home country proximity is significant for cross-listing valuation gains, these results highlight the signaling mechanism of home country governance quality as an appealing factor for firm cross-listing location in advanced exchange markets. Policymakers in emerging markets should consider governance reforms that enhance domestic firm competitiveness in global financial markets for higher valuation gains.

Keywords: BRICS; cross-listing; emerging market; developed market; market segmentation hypothesis (MSH); political stability; government effectiveness; voice and accountability (search for similar items in EconPapers)
JEL-codes: A1 D0 D4 D6 D7 D8 D9 E0 E2 E3 E4 E5 E6 E7 F0 F2 F3 F4 F5 F6 G0 G1 G2 H0 J0 K2 L0 L1 L2 M0 M1 M2 M3 M4 M5 N0 N1 N2 O0 O1 P0 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:gam:jbusin:v:5:y:2025:i:4:p:46-:d:1766986

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