Investor Protection, Investment Efficiency and Value: The Case of Cross-Listed Firms

Financial Management 44.3 (2015): 499-546.

64 Pages Posted: 23 Mar 2016 Last revised: 10 Apr 2016

See all articles by Fan He

Fan He

Central Connecticut State University

Chinmoy Ghosh

University of Connecticut - Department of Finance

Date Written: May 27, 2015

Abstract

We examine the impact of improved investor protection due to cross-listing on foreign firms’ investment decisions to explore the channels through which cross-listing increases foreign firms’ value. While we find that cross-listing increases firms’ capital expenditures and M&A activities, cross-listed firms also invest more in R&D, make better acquisition decisions, and have higher profitability compared to non-cross-listed firms. Moreover, cross-listing is associated with better cash utilization by foreign firms’ for investments. These improvements in investments and cash utilization are more pronounced for firms cross-listed on U.S. exchanges and for firms from countries with weaker investor protection laws.

Keywords: corporate governance, cross-listing, international finance

Suggested Citation

He, Fan and Ghosh, Chinmoy, Investor Protection, Investment Efficiency and Value: The Case of Cross-Listed Firms (May 27, 2015). Financial Management 44.3 (2015): 499-546.. Available at SSRN: https://ssrn.com/abstract=2753409

Fan He (Contact Author)

Central Connecticut State University ( email )

1615 Stanley Street
New Britian, CT 06050
United States

Chinmoy Ghosh

University of Connecticut - Department of Finance ( email )

School of Business
2100 Hillside Road
Storrs, CT 06269
United States
860-486-3040 (Phone)
860-486-0349 (Fax)

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