How crosslisting affects merger and acquisition activity

Elena Skouratova () and John Wald ()

Review of Quantitative Finance and Accounting, 2013, vol. 40, issue 2, 319-339

Abstract: Consistent with crosslisting decreasing the cost of capital, we find that firms which issue American Depositary Receipts (ADRs) are much more likely to undertake an acquisition than non-crosslisted firms. The results do not appear to be driven by self-selection, as the increase in acquisitions is robust to a Heckman correction as well as to a fixed-effect analysis. Adding the home country’s shareholder rights to the analysis, we find that crosslisted firms increase their takeover activity primarily if they are from weak shareholder rights countries. This evidence is consistent with crosslisting reducing the cost of capital of firms from weak governance countries significantly, and this reduction in cost of capital allows these firms to pursue more domestic and international takeovers. Copyright Springer Science+Business Media, LLC 2013

Keywords: Crosslisting; Takeovers; Bonding; G15; G34 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11156-012-0279-y

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