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On the Role of Cultural Distance in the Decision to Cross‐ L ist
Author(s) -
Dodd Olga,
Frijns Bart,
Gilbert Aaron
Publication year - 2015
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/j.1468-036x.2013.12038.x
Subject(s) - hofstede's cultural dimensions theory , uncertainty avoidance , listing (finance) , cross listing , individualism , cross cultural , affect (linguistics) , cultural diversity , business , marketing , economics , sociology , social psychology , psychology , market economy , political science , collectivism , finance , law , corporate governance , communication
This paper examines the role of culture in the choice of the destination market for cross‐listing firms. We argue that firms cross‐list in markets with greater cultural similarities, because 1) investors are more willing to invest in culturally familiar firms and 2) managers seek to avoid potential conflicts with culturally disparate investors and managers. Employing Hofstede's cultural dimensions, we find that firms from developed countries display greater cross‐listing propensity towards culturally similar countries. These results are robust to various alternative cultural measures. We further find that it is mainly the difference in uncertainty avoidance and individualism that affect cross‐listing decisions.