Cross-Listings and Voluntary Disclosure: International Evidence

• In Event: Financial Statement Disclosure

Abstract

This paper examines changes in firms’ disclosure behavior around cross-listings. Using an international setting, we find significant difference in the likelihood and frequency of management forecasts between cross-listed firms and firms with similar firm characteristics but not cross-listed. In addition, within the cross-listing sample, we observe higher likelihood and frequency of management forecasts when differences in accounting standards between a cross-listed firm’s home and target countries are larger. Further, we find that firms choosing to cross-list in target countries with larger difference in accounting standards tend to provide more voluntary disclosure prior to, rather than after their cross-listings, and such voluntary disclosure helps firms attract more foreign institutional ownership in their cross-listing target countries. Collectively, our evidence suggests that although differences in accounting standards across countries could act as a deterrent to firms’ cross-listing activities, cross-listed firms, by providing more management forecasts voluntarily, preemptively alleviate the information disadvantage faced by foreign institutional investors and thus successfully prompt these institutional investors to hold more of their shares.

Authors

• Long Chen, George Mason University

• Yashu Dong, Shanghai University of Finance and Economics

• Jeff Ng, The Chinese University of Hong Kong

• Albert Tsang, York University