Private Benefits and Cross-Listings in the United States

39 Pages Posted: 19 Nov 2003

See all articles by Evangelos Benos

Evangelos Benos

University of Illinois at Urbana-Champaign

Michael S. Weisbach

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: October 27, 2003

Abstract

In this paper, we review the literature on private benefits and cross-listings in the United States. We first discuss the alternative approaches used to measure private benefits. We survey recent evidence documenting cross-country differences in the levels of private benefits obtained by corporate managers, as well as the country-specific factors associated with high and low private benefits. We then explain how, by cross-listing its stock in a market with high disclosure and regulatory standards such as the United States, a firm can commit to a relatively low level of private benefits in the future. We discuss the circumstances under which managers would choose to cross-list their stocks in the United States, when such a cross-listing has important implications for managers' private benefits. Finally, we survey recent empirical work that tests empirical implications of this bonding view of cross-listings. Overall, this evidence provides a compelling case that the desire to protect shareholders' rights so as to facilitate access to equity markets is one of a number of reasons why firms choose to cross-list their stocks in the United States.

Keywords: cross-listings, private benefits, bonding

JEL Classification: G3, F3

Suggested Citation

Benos, Evangelos and Weisbach, Michael S., Private Benefits and Cross-Listings in the United States (October 27, 2003). Available at SSRN: https://ssrn.com/abstract=462027 or http://dx.doi.org/10.2139/ssrn.462027

Evangelos Benos

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

Michael S. Weisbach (Contact Author)

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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