Signaling a Lemon: The Decision Not to Cross-List and High Private Benefits of Control

Abstract:     
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, K22

working papers series