Corporate Governance and Disclosure Practices of MNC Subsidiaries and Cross-Listed Firms: An Institutional Environment Perspective

Abstract

Corporate governance and disclosure practices of listed firms having global exposure, such as subsidiaries of Multinational Corporations (MNCs) as well as domestic cross listed firms, are different from firms having only domestic exposure. Domestic listed firms are listed only in the home country and are governed by the local environment of their home country. However, this may not be the case for globally-exposed firms as they are governed by the institutional, legal and regulatory environment of home country as well as the host country where they are listed. This study seeks to identify whether corporate governance and disclosure practices of MNC subsidiaries and cross-listed firms are significantly different, by studying a sample of firms listed on the Bombay Stock Exchange, India, comprising MNC subsidiaries listed in India as well as cross-listed firms listed in the US/Europe. The research provides insight into the question of how a country’s institutional, legal and regulatory environment may influence the effectiveness of firm-level corporate governance mechanisms. The findings shed light on the governance and disclosure practices of MNC subsidiaries and cross listed firms, in the legal institutional environment of India versus US/Europe.

Keywords: corporate governance, MNC, BSE, cross-listing