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Foreign Cultures, Sarbanes-Oxley Act and Cross-DelistingMary Schmid DaughertyUniversity of St. Thomas (Minnesota) - Department of Financial Management Dobrina GeorgievaUniversity of St. Thomas (Minnesota) - University of St. Thomas, Minneapolis February 16, 2011 Abstract: Using a sample of foreign firms delisting shares from the United States over the period 2000 and 2004, this paper studies the impact of Sarbanes-Oxley Act (SOX) on the cross-delisting behavior of foreign firms based on the firm characteristics, legal tradition, overall culture and degree of individualism of the country of domicile. Pre-SOX, the propensity to delist is lower for firms from countries with cultural similarities to the U.S. and higher for firms from individualistic societies. Post-SOX these trends are reversed. Consistent with the existing research we find that the delisting decision of foreign firms cross-listed in the U.S. is based on the potential gains from listing based on the growth opportunities, length of presence in the U.S. and legal regulations of the country of domicile.
Number of Pages in PDF File: 34 Keywords: ADRs, Sarbanes-Oxley Act, Cross-listing, Delisting, Bonding, Reputation, Culture, Individualism, Hofstede Cultural Dimensions, International Finance JEL Classification: G15, K22 working papers seriesDate posted: February 19, 2011Suggested CitationContact Information
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