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http://ssrn.com/abstract=1744905
 
 

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What Makes the Bonding Stick? A Natural Experiment Involving the U.S. Supreme Court and Cross-Listed Firms


Amir N. Licht


Interdisciplinary Center (IDC) Herzliyah - Radzyner School of Law; European Corporate Governance Institute (ECGI)

Christopher Poliquin


Harvard Business School

Jordan I. Siegel


Harvard Business School

Xi Li


Hong Kong University of Science & Technology

August 27, 2013

Harvard Business School Strategy Unit Working Paper No. 11-072

Abstract:     
On March 29, 2010, the U.S. Supreme Court signaled its intention to geographically limit the reach of the U.S. securities antifraud regime and thus differentially exclude U.S.-listed foreign firms from the ambit of formal U.S. antifraud enforcement. We use this legal surprise as a natural experiment to test the legal bonding hypothesis. This event nonetheless was met with positive or indifferent market reactions based on matched samples, Brown-Warner, and portfolio analyses. These results challenge the value of at least the U.S. civil liability regime, as currently designed, as a legal bonding mechanism in such firms.

Number of Pages in PDF File: 69

Keywords: bonding, enforcement, reputation, cross-listing, corporate governance, civil liability

JEL Classification: G15, G18, G38

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Date posted: January 24, 2011 ; Last revised: August 27, 2013

Suggested Citation

Licht, Amir N. and Poliquin, Christopher and Siegel, Jordan I. and Li, Xi, What Makes the Bonding Stick? A Natural Experiment Involving the U.S. Supreme Court and Cross-Listed Firms (August 27, 2013). Harvard Business School Strategy Unit Working Paper No. 11-072. Available at SSRN: http://ssrn.com/abstract=1744905 or http://dx.doi.org/10.2139/ssrn.1744905

Contact Information

Amir N. Licht
Interdisciplinary Center (IDC) Herzliyah - Radzyner School of Law ( email )
P.O. Box 167
Herzliya, 46150
Israel
972-9-952-7332 (Phone)
952-9-9513323 (Fax)
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
952-9-9513323 (Fax)
HOME PAGE: http:/www.ecgi.org
Christopher Poliquin
Harvard Business School ( email )
Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States
207-415-0546 (Phone)
Jordan I. Siegel (Contact Author)
Harvard Business School ( email )
Morgan Hall 231
Soldiers Field
Boston, MA 02163
United States
617-495-6303 (Phone)
617-496-5859 (Fax)
Xi Li
Hong Kong University of Science & Technology ( email )
Clearwater Bay
Kowloon
Hong Kong
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