Does Cross-Listing in the US Foster Mergers and Acquisitions and Increase Target Shareholder Wealth?
65 Pages Posted: 2 Jul 2010 Last revised: 29 Nov 2010
Date Written: November 26, 2010
We examine the role of cross-listing in alleviating domestic market constraints and facilitating cross-border mergers and acquisitions. Cross-listing appears to strengthen the bargaining power of target firms, allowing them to extract higher takeover premiums relative to their non-cross-listed peers. Moreover, shareholders of Sarbanes-Oxley-compliant targets seem to benefit from a higher premium. We also find that cross-listed firms are more likely to be acquisition targets. This evidence is consistent with the idea that cross-listing increases firms' attractiveness and visibility on the market for corporate control. Our results are robust to various specifications and to the self-selection bias arising from the decision to cross-list.
Keywords: Cross-Listing, Mergers & Acquisitions, Governance, Sarbanes-Oxley Act
JEL Classification: G15, G34, K00
Suggested Citation: Suggested Citation