Signaling a Lemon: The Decision Not to Cross-List and High Private Benefits of Control
University of Virginia School of Law
David C. Smith
University of Virginia - McIntire School of Commerce
University of Virginia - Department of Economics
July 3, 2006
This paper studies the effects of firms' decision to cross-list on the frequency of controlling block sales by their domestic peers. Our results show that the announcement of cross-listing is associated with a positive and significant change in the frequency of sales among firms that choose not to cross-list. Though this paper focuses on cross-listing, our results have implications for other decisions at the midstream stage of a firm's life such as adopting corporate governance terms, distributing dividends and raising capital.
Keywords: private benefits of control, signaling, cross-listing
JEL Classification: G32, G34, K22working papers series
Date posted: January 20, 2007
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