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

36 Pages Posted: 19 May 2020

See all articles by Olga Dodd

Olga Dodd

Auckland University of Technology

Bart Frijns

Open University of the Netherlands - School of Management

Aaron Gilbert

Auckland University of Technology

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Date Written: September 2015

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 with greater cultural similarities, because 1) investors are more willing to invest in culturally familiar firms and 2) managers seek to avoid potential conflicts with culturally disparate investors and managers. Employing Hofstede's cultural dimensions, we find that firms from developed countries display greater cross‐listing propensity towards culturally similar countries. These results are robust to various alternative cultural measures. We further find that it is mainly the difference in uncertainty avoidance and individualism that affect cross‐listing decisions.

Keywords: national culture, cultural distance, international cross‐listing

Suggested Citation

Dodd, Olga and Frijns, Bart and Gilbert, Aaron, On the Role of Cultural Distance in the Decision to Cross‐List (September 2015). European Financial Management, Vol. 21, Issue 4, pp. 706-741, 2015, Available at SSRN: https://ssrn.com/abstract=3600245 or http://dx.doi.org/10.1111/j.1468-036X.2013.12038.x

Olga Dodd (Contact Author)

Auckland University of Technology ( email )

Auckland, 1142
New Zealand
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Bart Frijns

Open University of the Netherlands - School of Management ( email )

Valkenburgerweg 177
Heerlen, NL-6401DL
Netherlands

Aaron Gilbert

Auckland University of Technology

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