Private Benefits and Cross-Listings in the United States
University of Illinois at Urbana-Champaign
Michael S. Weisbach
Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER)
October 27, 2003
In this paper, we review the literature on private benefits and cross-listings in the United States. We first discuss the alternative approaches used to measure private benefits. We survey recent evidence documenting cross-country differences in the levels of private benefits obtained by corporate managers, as well as the country-specific factors associated with high and low private benefits. We then explain how, by cross-listing its stock in a market with high disclosure and regulatory standards such as the United States, a firm can commit to a relatively low level of private benefits in the future. We discuss the circumstances under which managers would choose to cross-list their stocks in the United States, when such a cross-listing has important implications for managers' private benefits. Finally, we survey recent empirical work that tests empirical implications of this bonding view of cross-listings. Overall, this evidence provides a compelling case that the desire to protect shareholders' rights so as to facilitate access to equity markets is one of a number of reasons why firms choose to cross-list their stocks in the United States.
Number of Pages in PDF File: 39
Keywords: cross-listings, private benefits, bonding
JEL Classification: G3, F3working papers series
Date posted: November 19, 2003
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo5 in 0.438 seconds