Financial Leverage and Competitive Strategy of Cross-Listing Firms
Posted: 3 May 2019
Date Written: October 9, 2018
Abstract
This study investigates the relationship between financial leverage and competitive strategies based on the investigation into the cross-listing announcements, through which the financial condition of a firm might shape the competition outcome. The empirical evidence shows that cross-listing announcements normally attract positive market responses to cross-listed firms but incur negative market responses to rival firms, especially upon the strategic substitutes competition. Cross-listed firms obtain more positive market responses if their financial leverage is lower, but the firms have no advantages when they are financially constrained. Less leveraged rival firms could weaken the negative impact and even gain positive market responses upon the strategic complements competition.
Keywords: Competitive strategy, cross-list, event study, financial leverage, firm value
JEL Classification: G14, G32, M16
Suggested Citation: Suggested Citation