Does cross-listing lead to functional convergence? Empirical evidence
Meghana Ayyagari ()
No 3264, Policy Research Working Paper Series from The World Bank
The author examines the effect of legal bonding on ownership and control structures of foreign firms cross-listing in the United States. Contrary to the predictions of corporate governance convergence theories, there is little evidence of convergence-related migration to a dispersed ownership structure on cross-listing. She finds that rather than as a means to change their governance structure, foreign firms use American Depository Receipts as a vehicle to sell control blocks, often to a new foreign owner. Firms that cross-list and sell stakes to domestic owners are from large economies with high stock market liquidity. In contrast, firm-level characteristics are more important predictors of a control change to a foreign owner. Cross-listing firms that sell control blocks to foreigners tend to be smaller, have low levels of debt, and have a high foreign income growth rate. The post cross-listing performance of firms that undergo a control change is also different from firms that do not experience a control change.
Keywords: International Terrorism&Counterterrorism; Small and Medium Size Enterprises; Microfinance; Economic Theory&Research; Small Scale Enterprise; Private Participation in Infrastructure; Microfinance; Small Scale Enterprise; Economic Theory&Research; International Terrorism&Counterterrorism (search for similar items in EconPapers)
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