Financial Leverage and Competitive Strategy of Cross-Listing Firms

Posted: 3 May 2019

See all articles by Chi-Lin Yang

Chi-Lin Yang

University of Taipei

Min-Hsien Chiang

National Cheng Kung University - Institute of International Business

Chien-Wei Chen

affiliation not provided to SSRN

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

Yang, Chi-Lin and Chiang, Min-Hsien and Chen, Chien-Wei, Financial Leverage and Competitive Strategy of Cross-Listing Firms (October 9, 2018). Australian Journal of Management, Vol. 44, No. 2, 2019, Available at SSRN: https://ssrn.com/abstract=3364342

Chi-Lin Yang (Contact Author)

University of Taipei ( email )

Taipei
Taiwan

Min-Hsien Chiang

National Cheng Kung University - Institute of International Business ( email )

1 University Rd.
Tainan, 70101
Taiwan

Chien-Wei Chen

affiliation not provided to SSRN

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