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Cross-Listing, Bonding Hypothesis and Corporate Governance

Authors

  • Andreas Charitou,

    1. The first and third authors are from the University of Cyprus. The second author is from the University of Durham, UK. They would like to thank M. Walker (editor) and an anonymous referee for very valuable suggestions. They also thank I. Georgiou, I. Karamanou, N. Lambertidis, G. Mardas, S. Martzoukos, G. Nishiotis, G. Theodoulou, N. Vafeas, the participants of the 2006 European Accounting Association conference, and the participants of the 6th Annual Conference on Contemporary Issue in Capital Markets and Financial Economics (2006) for helpful comments on earlier drafts. They would also like to thank S. Charitou and the American Embassy in Nicosia for providing access to the Lexis Nexis database. They acknowledge financial support from the University of Cyprus and from the Institute of Certified Public Accountants of Cyprus (PriceWaterhouseCoopers, Deloitte and Touch, Ernst and Young, KPMG, Chrysanthou and Christoforou, Moore Stevens, Demetriades, Siakos, Pifanis, Gregoriou & Co).
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  • Christodoulos Louca,

    1. The first and third authors are from the University of Cyprus. The second author is from the University of Durham, UK. They would like to thank M. Walker (editor) and an anonymous referee for very valuable suggestions. They also thank I. Georgiou, I. Karamanou, N. Lambertidis, G. Mardas, S. Martzoukos, G. Nishiotis, G. Theodoulou, N. Vafeas, the participants of the 2006 European Accounting Association conference, and the participants of the 6th Annual Conference on Contemporary Issue in Capital Markets and Financial Economics (2006) for helpful comments on earlier drafts. They would also like to thank S. Charitou and the American Embassy in Nicosia for providing access to the Lexis Nexis database. They acknowledge financial support from the University of Cyprus and from the Institute of Certified Public Accountants of Cyprus (PriceWaterhouseCoopers, Deloitte and Touch, Ernst and Young, KPMG, Chrysanthou and Christoforou, Moore Stevens, Demetriades, Siakos, Pifanis, Gregoriou & Co).
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  • Stelios Panayides

    Corresponding author
    1. The first and third authors are from the University of Cyprus. The second author is from the University of Durham, UK. They would like to thank M. Walker (editor) and an anonymous referee for very valuable suggestions. They also thank I. Georgiou, I. Karamanou, N. Lambertidis, G. Mardas, S. Martzoukos, G. Nishiotis, G. Theodoulou, N. Vafeas, the participants of the 2006 European Accounting Association conference, and the participants of the 6th Annual Conference on Contemporary Issue in Capital Markets and Financial Economics (2006) for helpful comments on earlier drafts. They would also like to thank S. Charitou and the American Embassy in Nicosia for providing access to the Lexis Nexis database. They acknowledge financial support from the University of Cyprus and from the Institute of Certified Public Accountants of Cyprus (PriceWaterhouseCoopers, Deloitte and Touch, Ernst and Young, KPMG, Chrysanthou and Christoforou, Moore Stevens, Demetriades, Siakos, Pifanis, Gregoriou & Co).
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* Address for correspondence: Andreas Charitou, Department of Business Administration, University of Cyprus, P.O. Box 20537, Nicosia, CY 1678 Cyprus. e-mail: charitou@ucy.ac.cy

Abstract

Abstract:  This paper examines the relationship between cross-listing and corporate governance for Canadian firms, that were cross-listed on US stock exchanges during the period 1997–2003. We find that cross-listed firms have more independent boards and audit committees after the listing relative to a non-cross-listed matched sample of firms and relative to the pre-listing period. Moreover, cross-listed firms experience changes in their ownership structure after the listing. Finally, we provide evidence that the sensitivity of the relation between cross-listed firm valuation with audit committee independence and ownership structure becomes more important after the listing. The results are robust after adjusting for various firm risk characteristics. Overall, the results are consistent with the literature on the bonding role of cross-listings on US stock exchanges.

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