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Signaling a Lemon: The Decision Not to Cross-List and High Private Benefits of Control

Posted: 20 Jan 2007  

Michal Barzuza

University of Virginia School of Law

David C. Smith

University of Virginia - McIntire School of Commerce

Elio Valladares

University of Virginia - Department of Economics

Date Written: July 3, 2006

Abstract

This paper studies the effects of firms' decision to cross-list on the frequency of controlling block sales by their domestic peers. Our results show that the announcement of cross-listing is associated with a positive and significant change in the frequency of sales among firms that choose not to cross-list. Though this paper focuses on cross-listing, our results have implications for other decisions at the midstream stage of a firm's life such as adopting corporate governance terms, distributing dividends and raising capital.

Keywords: private benefits of control, signaling, cross-listing

JEL Classification: G32, G34, K22

Suggested Citation

Barzuza, Michal and Smith, David C. and Valladares, Elio, Signaling a Lemon: The Decision Not to Cross-List and High Private Benefits of Control (July 3, 2006). Available at SSRN: https://ssrn.com/abstract=914000

Michal Barzuza (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

David Carl Smith

University of Virginia - McIntire School of Commerce ( email )

P.O. Box 400173
Charlottesville, VA 22904-4173
United States

Elio Valladares

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States

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