International Cross-Listing, Firm Performance and Top Management Turnover: A Test of the Bonding Hypothesis
59 Pages Posted: 28 Apr 2007
We examine a primary outcome of corporate governance, the ability to identify and terminate poorly performing CEOs, to test the effectiveness of U.S. investor protections in improving the corporate governance of cross-listed firms. We find that firms from weak investor protection regimes that are cross-listed on a major U.S. exchange are more likely to terminate poorly performing CEOs than non-cross-listed firms. Cross-listings on exchanges that do not require the adoption of the most stringent investor protections (OTC, private placements and London listings) are not associated with a higher propensity to shed poorly performing CEOs.
Keywords: CEO turnover, cross-listing, bonding
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