Insider-owned firms pursue U.S. cross-listings following periods of extraordinary performance. However, the long-run post-cross-listing abnormal returns become negative only for insider-controlled cross-listings. We find that the Sarbanes–Oxley Act (SOX) has mitigated the market-timing attempts as negative abnormal returns are limited to the pre-SOX period, supporting a cross-listing bonding benefit after U.S. securities regulation was enhanced. In addition, investors anticipate future operating performance as stock returns incorporate forthcoming operating outcomes one and two years ahead. Whereas capital-raising cross-listings show better operating performance than non-capital-raising, the returns of capital-raising firms are more sensitive to the potential agency problems created by insider-ownership.
Esqueda, Omar A., and Dave O. Jackson. “Cross-Listing Performance and Insider Ownership: The Experience of U.S. Investors.” Journal of Multinational Financial Management 32–33 (December 1, 2015): 77–94. https://doi.org/10.1016/j.mulfin.2015.10.001.
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Journal of Multinational Financial Management