Financial leverage and competitive strategy of cross-listing firms

Chi-Lin Yang, Min-Hsien Chiang and Chien-Wei Chen
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Chi-Lin Yang: Department of Urban Industrial Management and Marketing, University of Taipei, Taipei, Taiwan
Min-Hsien Chiang: Institute of International Business, National Cheng Kung University, Tainan, Taiwan
Chien-Wei Chen: Department of International Business, National Chengchi University, Taipei, Taiwan

Australian Journal of Management, 2019, vol. 44, issue 2, 306-324

Abstract: This study investigates the relationship between financial leverage and competitive strategies based on the investigation into the cross-listing announcements, through which the financial condition of a firm might shape the competition outcome. The empirical evidence shows that cross-listing announcements normally attract positive market responses to cross-listed firms but incur negative market responses to rival firms, especially upon the strategic substitutes competition. Cross-listed firms obtain more positive market responses if their financial leverage is lower, but the firms have no advantages when they are financially constrained. Less leveraged rival firms could weaken the negative impact and even gain positive market responses upon the strategic complements competition. JEL classification: G14, G32, M16

Keywords: Competitive strategy; cross-list; event study; financial leverage; firm value (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:44:y:2019:i:2:p:306-324

DOI: 10.1177/0312896218792967

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