Liu, Li Xian, and Li, Jun (2020) Corporate governance and listing location of Chinese firms: the bonding theory revisited. Journal of the Asia Pacific Economy, 25 (1). pp. 40-61.

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Abstract

This study develops and tests several bonding theory-derived hypotheses using a panel dataset covering the Chinese firms cross-listed in the US, Hong Kong, Singapore and London over the period 2001–2012. Our empirical results challenge the general postulate of bonding theory that cross-listing in international stock markets helps to improve the corporate and financial performance of firms whose home countries have weaker institutions and lower-level legal enforcement to protect minor investors. We show that the bonding theory only holds partially for Chinese firms cross-listed in the United States markets, whereas it is not evidenced for the rest of share markets in the sample. It is argued that the general bonding theory needs to contextualise endogenous characteristics such as firms' listing locations.

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