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Investor Protection, Investment Efficiency and Value: The Case of Cross‐Listed Firms
Author(s) -
Ghosh Chinmoy,
He Fan
Publication year - 2015
Publication title -
financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.647
H-Index - 68
eISSN - 1755-053X
pISSN - 0046-3892
DOI - 10.1111/fima.12076
Subject(s) - cross listing , business , profitability index , listing (finance) , finance , value (mathematics) , investor protection , cash , monetary economics , investment (military) , mergers and acquisitions , enterprise value , capital expenditure , financial system , economics , corporate governance , machine learning , politics , computer science , political science , law
We examine the impact of improved investor protection due to cross‐listing on foreign firms’ investment decisions and firm value. While we find that cross‐listing increases firms’ capital expenditures and mergers and acquisitions activities, cross‐listed firms also invest more in research and development, make better acquisition decisions, and have higher profitability compared to non‐cross‐listed firms. Moreover, cross‐listing is associated with better cash utilization by foreign firms for investments. These improvements in investments and cash utilization are more pronounced for firms cross‐listed on US exchanges and for firms from countries with weak investor protection laws.