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Private Benefits of Control, Ownership, and the Cross-listing Decision







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    • Doidge is at the Rotman School of Management, University of Toronto. Karolyi is at the Fisher College of Business, Ohio State University. Lins is at the Eccles School of Business, University of Utah. Miller is at the Cox School of Business, Southern Methodist University. Stulz is at the Fisher College of Business, Ohio State University, ECGI, and NBER. We thank Stijn Claessens, Simeon Djankov, Mara Faccio, and Larry Lang for access to their ownership data. We also thank Kent Baker, John Nofsinger, and Daniel Weaver as well as Sergei Sarkissian and Michael Schill for data access. We are grateful to participants at the Assurant/Georgia Tech International Finance Conference, Wharton Impact Conference on the Future of Cross-Border Equity Issuance and Trading, as well as seminar participants at the University of Arizona, Erasmus University, University of Georgia, George Mason University, Harvard University, University of Houston, University of Illinois, Ohio State University, University of Oklahoma, the Securities and Exchange Commission, SUNY-Buffalo, Temple University, Washington University at St. Louis, World Bank, and York University, and to an anonymous referee, Warren Bailey, Henrik Cronqvist, Mara Faccio, Nandini Gupta, William Megginson, Paolo Pasquariello, Michael Schill, Rob Stambaugh (the editor), and Frank Warnock for helpful comments. Ivalina Kalcheva and Roger Loh provided excellent research assistance. Doidge thanks the Social Sciences and Humanities Research Council of Canada for financial support. Karolyi is grateful to the Dice Center for Financial Economics for financial support.


This paper investigates how a foreign firm's decision to cross-list on a U.S. stock exchange is related to the consumption of private benefits of control by its controlling shareholders. Theory has proposed that when private benefits are high, controlling shareholders are less likely to choose to cross-list in the United States because of constraints on the consumption of private benefits resulting from such listings. Using several proxies for private benefits related to the control and cash flow ownership rights of controlling shareholders, we find support for this hypothesis with a sample of more than 4,000 firms from 31 countries.