On the Role of Cultural Distance in the Decision to Cross-List


  • We would like to thank John Doukas, two anonymous referees and participants at the European Financial Management Association Conference (Barcelona, 2012), the International Finance and Banking Society Conference (Valencia, 2012), Multinational Finance Society Conference (Krakow, 2012) and the Manawatu Seminar Series at Massey University for helpful comments and suggestions. Correspondence: Olga Dodd.


This paper examines the role of culture in the choice of the destination market for cross-listing firms. We argue that firms cross-list in markets with greater cultural similarities, because 1) investors are more willing to invest in culturally familiar firms and 2) managers seek to avoid potential conflicts with culturally disparate investors and managers. Employing Hofstede's cultural dimensions, we find that firms from developed countries display greater cross-listing propensity towards culturally similar countries. These results are robust to various alternative cultural measures. We further find that it is mainly the difference in uncertainty avoidance and individualism that affect cross-listing decisions.