International Cross-Listing, Firm Performance, and Top Management Turnover: A Test of the Bonding Hypothesis




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    • Lel is from the Federal Reserve Board and Miller is from Edwin L. Cox School of Business at Southern Methodist University. We thank an anonymous referee and associate editor; Campbell Harvey (the editor); Mark Carey, Craig Doidge, Art Durnev, Nandini Gupta, David Mauer, Chip Ryan, Chester Spatt, and Wendy Wilson; and seminar participants at the 2006 University of North Carolina GIA Conference, the 2006 University of Oregon Corporate Finance Conference, the 2006 Financial Research Association Conference, the 2006 Utah Winter Finance Conference, Louisiana State University, and the University of Texas at Dallas. We thank Bill Megginson and Meghanna Ayyagari for data access and Charles Murry and Laurel Nguyen for excellent research assistance. This paper represents the authors' opinions and not necessarily those of the Federal Reserve Board. All errors are the sole responsibility of the authors.


We examine a primary outcome of corporate governance, namely, the ability to identify and terminate poorly performing CEOs, to test the effectiveness of U.S. investor protections in improving the corporate governance of cross-listed firms. We find that firms from weak investor protection regimes that are cross-listed on a major U.S. Exchange are more likely to terminate poorly performing CEOs than non-cross-listed firms. Cross-listings on exchanges that do not require the adoption of stringent investor protections (OTC, private placements, and London listings) are not associated with a higher propensity to remove poorly performing CEOs.