Foreign Cultures, Sarbanes-Oxley Act and Cross-Delisting

34 Pages Posted: 19 Feb 2011

See all articles by Mary Schmid Daugherty

Mary Schmid Daugherty

University of St. Thomas - Department of Financial Management

Dobrina Georgieva Jandik

University of St. Thomas

Date Written: February 16, 2011

Abstract

Using a sample of foreign firms delisting shares from the United States over the period 2000 and 2004, this paper studies the impact of Sarbanes-Oxley Act (SOX) on the cross-delisting behavior of foreign firms based on the firm characteristics, legal tradition, overall culture and degree of individualism of the country of domicile. Pre-SOX, the propensity to delist is lower for firms from countries with cultural similarities to the U.S. and higher for firms from individualistic societies. Post-SOX these trends are reversed. Consistent with the existing research we find that the delisting decision of foreign firms cross-listed in the U.S. is based on the potential gains from listing based on the growth opportunities, length of presence in the U.S. and legal regulations of the country of domicile.

Keywords: ADRs, Sarbanes-Oxley Act, Cross-listing, Delisting, Bonding, Reputation, Culture, Individualism, Hofstede Cultural Dimensions, International Finance

JEL Classification: G15, K22

Suggested Citation

Schmid Daugherty, Mary and Jandik, Dobrina Georgieva, Foreign Cultures, Sarbanes-Oxley Act and Cross-Delisting (February 16, 2011). Available at SSRN: https://ssrn.com/abstract=1762787 or http://dx.doi.org/10.2139/ssrn.1762787

Mary Schmid Daugherty

University of St. Thomas - Department of Financial Management ( email )

1000 LaSalle Ave
St. Paul, MN 55403
United States

Dobrina Georgieva Jandik (Contact Author)

University of St. Thomas ( email )

1000 LaSalle Ave.
Minneapolis, MN 55403
United States

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