On the Role of Cultural Distance in the Decision to Cross-List

48 Pages Posted: 16 Oct 2012 Last revised: 28 May 2013

See all articles by Olga Dodd

Olga Dodd

Auckland University of Technology

Bart Frijns

Auckland University of Technology - Faculty of Business & Law

Aaron B. Gilbert

Auckland University of Technology - Faculty of Business & Law

Date Written: April 30, 2013

Abstract

This paper examines the role of culture in the choice of the destination market for cross-listing firms. We argue that firms cross-list in markets that have greater cultural similarities since 1) investors are more willing to invest in firms with which they are culturally more familiar and 2) managers may seek to avoid potential conflicts with culturally disparate investors and managers. Employing Hofstede’s cultural dimensions, we find that firms from developed markets show a greater propensity to cross-list in a country with similar values as their home country. These results are robust to a range of alternative cultural measures, including modified Hofstede scores, societal practices scores from the Global Leadership and Organizational Behavior Effectiveness (GLOBE) project, and World Values Survey scores. In addition, we find that not all aspects of culture matter and that it is mainly the difference in uncertainty avoidance that affects cross-listing decisions.

Keywords: National culture, cultural distance, international cross-listing

JEL Classification: C24, G10

Suggested Citation

Dodd, Olga and Frijns, Bart and Gilbert, Aaron B., On the Role of Cultural Distance in the Decision to Cross-List (April 30, 2013). Available at SSRN: https://ssrn.com/abstract=2162220 or http://dx.doi.org/10.2139/ssrn.2162220

Olga Dodd (Contact Author)

Auckland University of Technology ( email )

Auckland, 1142
New Zealand
+6499219999 ext 5423 (Phone)

Bart Frijns

Auckland University of Technology - Faculty of Business & Law ( email )

3 Wakefield Street
Private Bag 92006
Auckland Central 1020
New Zealand

Aaron B. Gilbert

Auckland University of Technology - Faculty of Business & Law ( email )

3 Wakefield Street
Private Bag 92006
Auckland Central 1020
New Zealand

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