Open AccessEffect Of Liability Of Foreignness And Family Ownership On Cross-Listing Location Choice
Author(s) -
He Soung Ahn,
Hyejin Cho
Publication year - 2016
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.149
H-Index - 22
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v33i1.9891
Subject(s) - listing (finance) , context (archaeology) , business , liability , preference , destinations , cross listing , logit , capital (architecture) , foreign ownership , finance , economics , foreign direct investment , microeconomics , corporate governance , econometrics , law , history , paleontology , macroeconomics , tourism , archaeology , political science , biology
Firms incur liability of foreignness (LOF) when they expand their businesses to foreign countries. This study examines the applicability of LOF in the context of financing in a foreign capital market. Using an alternative-specific conditional logit model, we investigate the cross-listing decisions of firms from 28 countries that select among eight target destinations from 1994 to 2008. These firms target capital markets with lower LOF, which is measured by institutional, economic, geographic, and cultural distance. Such preference is particularly stronger for firms with higher levels of family ownership, suggesting family owners’ tendency to be averse to risk is also manifested in financing context.