Cross-listings, Antitakeover Defenses, and the Insulation Hypothesis
39 Pages Posted: 23 May 2021 Last revised: 12 Jun 2021
Date Written: May 18, 2021
This paper tests a theory conjecturing that cross-listing can insulate firms from potential hostile takeovers owing to the increased cost concern of bidders. We find a significant and positive relation between the corporate control threat and the likelihood that firms cross-list in a foreign country. Firms facing takeover threats are more likely to choose hosting countries with greater accounting differences from the U.S. GAAP. Subsample evidence suggests that cross-listing is more likely to be used as an antitakeover device if firms have foreign market exposure or when all-cash offers are less likely. Tests based on quasi-natural experiments provide further support.
Keywords: Cross-listing, Takeover deterrent, Poison pills
JEL Classification: G15, G34, G38, K22
Suggested Citation: Suggested Citation