We gratefully acknowledge the financial support of the Temple University Center for International Business Education and Research (CIBER) for the acquisition of the Taiwan Economic Journal Database. We would like to thank the anonymous reviewer, Stephen Owusu-Ansah, Roland Lipka and the participants of concurrent sessions of the 2005 British Accounting Association Annual Conference, the 2006 Annual Congress of the European Accounting Association, and the 2006 Annual Meeting of the American Accounting Association for their helpful comments and suggestions. Remaining errors are the responsibility of the authors. Data availability: Data used in this study are available from the public sources identified in the paper.
The Economic Consequences of Increased Disclosure: Evidence from Cross-Listings of Chinese Firms
Article first published online: 11 JAN 2008
Journal of International Financial Management & Accounting
Volume 19, Issue 1, pages 1–27, Spring 2008
How to Cite
Sami, H. and Zhou, H. (2008), The Economic Consequences of Increased Disclosure: Evidence from Cross-Listings of Chinese Firms. Journal of International Financial Management & Accounting, 19: 1–27. doi: 10.1111/j.1467-646X.2008.01014.x
- Issue published online: 11 JAN 2008
- Article first published online: 11 JAN 2008
In this paper, we investigate the impact of cross-listings on information asymmetry risk, the cost of capital and firm value of a group of cross-listed Chinese companies. Our paper is the first to examine the effect of cross-listing on information asymmetry risk. Because cross-listed firms are subject to increased disclosure requirements, increased regulatory scrutiny and increased legal liability, we propose that Chinese cross-listed firms have lower information asymmetry risk, lower cost of capital and higher firm value than their non-cross-listed counterparts. We find in both univariate and multivariate tests that cross-listed firms enjoyed lower information asymmetry risk in the domestic market compared with the non-cross-listed firms. We also find that cross-listed firms have lower cost of capital in the cross-listing market than non-cross-listed firms in the domestic markets. Finally, we find that cross-listed firms are associated with higher firm value as measured by Tobin's Q. These results have implications for international investors and companies seeking cross-listing opportunities.