Working Paper: NBER ID: w10224
Authors: Evangelos Benos; Michael S. Weisbach
Abstract: In this paper, we review the literature on private benefits and cross-listings in the United States. We first discuss the alternative approaches used to measure private benefits. We survey recent evidence documenting cross-country differences in the levels of private benefits obtained by corporate managers, as well as the country-specific factors associated with high and low private benefits. We then explain how, by cross-listing its stock in a market with high disclosure and regulatory standards such as the United States, a firm can commit to a relatively low level of private benefits in the future. We discuss the circumstances under which managers would choose to cross-list their stocks in the United States, when such a cross-listing has important implications for managers' private benefits. Finally, we survey recent empirical work that tests empirical implications of this bonding view of cross-listings. Overall, this evidence provides a compelling case that the desire to protect shareholders' rights so as to facilitate access to equity markets is one of a number of reasons why firms choose to cross-list their stocks in the United States.
Keywords: No keywords provided
JEL Codes: G3; F3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high levels of private benefits (H42) | cross-listing in the U.S. (G10) |
| cross-listing in the U.S. (G10) | access to external capital (O36) |
| cross-listing in the U.S. (G10) | reduction of private benefits (H42) |
| cross-listing in the U.S. (G10) | increase in shareholder rights (G38) |
| weak investor protections (G38) | cross-listing in the U.S. (G10) |
| cross-listing in the U.S. (G10) | mitigate agency problems (G34) |
| cross-listed firms (G34) | lower levels of private benefits (H49) |