Does bonding really bond? Liability of foreignness and cross-listing of Chinese firms on international stock exchanges

Liu, Li Xian, Jiang, Fuming, and Sathye, Milind (2017) Does bonding really bond? Liability of foreignness and cross-listing of Chinese firms on international stock exchanges. Research in International Business and Finance, 41. pp. 109-124.

[img] PDF (Published Version) - Published Version
Restricted to Repository staff only

View at Publisher Website: http://doi.org/10.1016/j.ribaf.2017.04.0...
 
1


Abstract

This study examines the relationship between cross-listing and firm valuation in the context of Chinese firms cross-listed on major international exchanges, such as the NASDAQ, New York Stock Exchange (NYSE), Hong Kong Main Board, Hong Kong Growth Enterprise Market (GEM), Singapore Stock Exchange, and London Alternative Investment Market (LAIM). Through the lenses of bonding theory and liability of foreignness-based multinational enterprise theories, two sets of alternative hypotheses are developed and tested using panel data over a period of twelve years during 2001–2012. Contrary to the bonding theory, the results reveal that the firms listed in Mainland China recorded better valuation than the firms cross-listed on the international stock exchanges. The more sophisticated corporate governance mechanisms applied in international stock exchanges do not always entail better firm valuation. Institutional distance, cultural distance and the distance in economic freedom between China and the cross-listing location countries interact with governance variables negatively affecting performance of cross-listed firms. The direct negative impact of the three distance variables on the firm valuation is also statistically significant. The outcome of Chinese firms' cross-listing behaviours appears to contradict the general bonding theory.

Item ID: 52967
Item Type: Article (Research - C1)
ISSN: 1878-3384
Keywords: corporate governance, Chinese cross-listing, bonding hypothesis, liability of foreignness, institutional distance, economic freedom, cultural distance
Date Deposited: 27 Mar 2018 03:05
FoR Codes: 15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1502 Banking, Finance and Investment > 150201 Finance @ 100%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9104 Management and Productivity > 910402 Management @ 100%
Downloads: Total: 1
More Statistics

Actions (Repository Staff Only)

Item Control Page Item Control Page