The Impact of International Cross Listing on Corporate Governance and Stock Price Informativeness

Over the past few years, the bonding hypothesis proposed by a lot of recent studies is used to examine the phenomenon of international cross-listing activities. Existing theories, such as market segmentation, cannot completely predict the benefits of cross listings overseas. In this case, the bonding hypothesis has attracted the attention of academics and practitioners. However, a few scholars indicate that the empirical evidence related to bonding hypothesis is fairly indirect and yields mixed results. Moreover, the validity of this hypothesis has been called into question. While in theory a cross listing should lead to more effective corporate governance, the ability of a cross listing to serve as a bonding mechanism is still under debate. In addition, there is growing evidence supporting the alternative hypothesis of information channel to justify the cross listing on US market. Usually, a cross-listing enables firms to obtain, from the stock market, more precise information about the value of their growth opportunities. This research is in an attempt to explore the interrelationship among cross listings, corporate governance, and stock price informativeness in a more deeply manner via using the bonding hypothesis and the alternatives, which are avoiding hypothesis information channel hypothesis, respectively. Our focus is the impact of the decision of a foreign firm to cross-list in the U.S. market on its corporate governance and information environment.

Project ID:PF10006-0818
External Project ID:NSC100-2410-H182-007