International Cross‐Listing, Firm Performance, and Top Management Turnover: A Test of the Bonding Hypothesis

By Ugur Lel, Darius P. Miller. 2006

267 citations recorded by the source corpus.

We examine a primary outcome of corporate governance, namely, 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 stringent investor protections (OTC, private placements, and London listings) are not associated with a higher propensity to remove poorly performing CEOs. DOES CROSS-LISTING IN THE UNITED STATES IMPROVE the corporate governance of foreign firms? The “bonding hypothesis” proposed by Coffee (1999, 2002) and Stulz (1999) predicts that after listing on a major U.S. stock exchange, foreign firms become subject to stringent U.S. investor protections that constrain insiders from expropriating minority shareholders. Because this hypothesis has important implications for the effectiveness of U.S. laws and enforcement as well as the efficacy of market-based approaches in improving global corporate governance, it has attracted the recent attention of academics and practitioners alike. To date, empirical support for the bonding hypothesis is principally drawn from the large literature that examines the economic consequences of crosslisting in the United States. 1 However, as Leuz (2006) notes, the evidence in many of these studies is fairly indirect, as it is difficult to attribute the economic consequences of cross-listing directly to the bonding hypothesis because many

Subfields: Accounting

View Paper: https://www.semanticscholar.org/paper/11537ac7fb7bd576487f51b001770776a43e0feb

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Citations in the corpus

Corporate governance, law, culture, environmental performance and CSR disclosure: A global perspective (2020, unknown): “For example, cross-listed firms have high odds to dismiss low performing CEOs (Lel and Miller, 2008).”
Effects of national culture on earnings quality of banks (2011, unknown): “Our test specification closely follows Lel and Miller (2008), Erkens, Hung, and Matos (2009), and Beltratti and Stulz (2010).”
Does Takeover Activity Cause Managerial Discipline? Evidence from International M&A Laws (2015, unknown): “…which were discontinued in 2004. use other titles for top managers, we use the top manager titles used by DeFond and Hung (2004), Gibson (2003), and Lel and Miller (2008).7 After the top manager in the firm is identified, we first compare the last names and the first letter of first names of top…”
IFRS reporting, firm-specific information flows, and institutional environments: international evidence (2012, unknown): “example, Leuz et al. (2006) investigate whether country- or firm-level governance matters to U.”
Corporate governance in the 2007–2008 financial crisis: Evidence from financial institutions worldwide (2012, unknown): “models, we follow Lel and Miller [2008] and evaluate the corrected marginal effects for”
Corporate Governance and Innovation: Theory and Evidence (2014, background): “indeed satised and the managers optimal project choice solves (25).”
Ability of accounting and audit quality variables to predict bank failure during the financial crisis (2011, unknown): “Our test specification closely follows Lel and Miller (2008), Erkens et al.”