上海交通大学：《外国法专题（比较公司法）》课程教学资料（学生展示）Cross-listing

Cross-listing Sun Yubei

Cross-listing Sun Yubei

Article 1: Corporate governance,agency problems and international cross-listing:a defense of the bonding hypothesis G.Andrew Karolyi

Article 1: Corporate governance, agency problems and international cross-listing: a defense of the bonding hypothesis —— G. Andrew Karolyi

What is cross-listing? Cross-/isting is usually a strategic choice made by a firm to list its equity shares on one or more exchanges,in addition to its domestic exchanges

What is cross-listing? Cross-listing is usually a strategic choice made by a firm to list its equity shares on one or more exchanges, in addition to its domestic exchanges

Market Bonding segmentation hypothesis Motivations Market Investor liquidity recognition

Motivations Market segmentation Investor recognition Market liquidity Bonding hypothesis

Market segmentation hypothesis Regulato ry restrictio ns Costs Informa proble tion barriers ms problem S Investor prefere nce

Market segmentation hypothesis Regulato ry restrictio ns Costs proble ms Investor prefere nce… Informa tion problem s

Market segmentation hypothesis When the investment barrier is higher: Share's Segment ed owned by Higher Super risk Higher More compensat capital Cross- local risk market ion cost listing investors

• When the investment barrier is higher: Market segmentation hypothesis Segment ed market Share’s owned by local investors Higher risk Super risk compensat ion Higher capital cost More Cross￾listing

Market liquidity more liquid equity markets could lead to an increase in the liquidity of the stock and a decrease in the cost of capital

• more liquid equity markets could lead to an increase in the liquidity of the stock and a decrease in the cost of capital. Market liquidity

Investor recognition Signal effect o Stringent disclosure requirements Improved information to potential investors and customers Media attention o Greater analyst coverage Better analyst's forecast reports o Higher quality accounting information

Investor recognition

Bonding hypothesis Investor protection cross-listing in higher standard market acts as a bonding mechanism used by firms(that are incorporated in a jurisdiction with poor investor protection and enforcement systems to)commit themselves voluntarily to higher standards of corporate governance. In this way,firms attract investors who would otherwise be reluctant to invest

• Investor protection • cross-listing in higher standard market acts as a bonding mechanism used by firms (that are incorporated in a jurisdiction with poor investor protection and enforcement systems to) commit themselves voluntarily to higher standards of corporate governance. • In this way, firms attract investors who would otherwise be reluctant to invest. Bonding hypothesis

Disadvantages pressure on reporting and executives for disclosure public scrutiny requirements scrutiny by analysts in Listing fees advanced market

Disadvantages pressure on executives for public scrutiny reporting and disclosure requirements scrutiny by analysts in advanced market Listing fees