Freezeouts of Cross-Listed Issuers

28 Pages Posted: 22 May 2024

See all articles by Fernan Restrepo

Fernan Restrepo

University of California - Los Angeles

Guhan Subramanian

Harvard Business School

Date Written: May 22, 2024


In recent years, the popular press and academic commentators have expressed a concern that controlling shareholders of foreign issuers with a cross-listing in the United States (and especially Chinese issuers) are exploiting U.S. investors by paying unfairly low prices in freezeout transactions. But despite the political and economic significance of these claims, there is no systematic evidence on them. We contribute to filling this gap by comparing the gains of the investors in freezeouts of cross-listed issuers and freezeouts of domestic issuers during the 2000-2021 period. The data show that investors in fact receive approximately 6-11% lower returns in freezeouts of issuers located in “Restrictive Markets” (i.e., jurisdictions that U.S. authorities have flagged as posing a particularly high risk of exploitation) than investors in domestic companies. In addition, we show that this difference is driven by Chinese issuers. These results support the conclusion that minority investors in Chinese-controlled companies do not have the same protections as minority investors in U.S. companies, which may result in greater challenges for Chinese-controlled companies in raising capital (e.g., through a higher cost of capital) and an efficiency loss (as inefficient freezeouts might be facilitated).

Keywords: Freezeouts, Cross-Listed Issuers

JEL Classification: G30, G34, K22

Suggested Citation

Restrepo, Fernan and Subramanian, Guhan, Freezeouts of Cross-Listed Issuers (May 22, 2024). Available at SSRN: or

Fernan Restrepo (Contact Author)

University of California - Los Angeles ( email )

385 Charles E Young Dr E
Los Angeles, CA 90095
United States
6502835952 (Phone)

Guhan Subramanian

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States
617-495-9784 (Phone)
617-496-7379 (Fax)

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