Evolution of control of cross-listed companies. Issue 15 (7th December 2016)

• Record Type: Journal Article
• Authors: Abdallah, Wissam; Goergen, Marc
• Is Part Of: European journal of finance. Volume 22:Issue 15(2016)
• Page Start: 1507
• Page End: 1533
• Publication Date: 2016-12-07
• Subjects: cross-listing -- corporate governance -- corporate control; Finance -- Periodicals; Finance -- Europe -- Periodicals; International finance -- Periodicals; 332.094
• DOI: 10.1080/1351847X.2014.1003312
• Languages: English
• ISSNs: 1351-847X

Abstract

Abstract : There are two theories on the determinants of the control structure of the firm. The first theory postulates that the control structure is determined by company-specific characteristics. The second theory emphasises the importance of institutional characteristics in shaping this structure. In this paper, we test the validity of both theories in the context of a cross-listing, which causes a change to the company's legal environment. We find that the initial control structure, risk and size determine the control structure post cross-listing and that cross-listing on better quality markets facilitates the evolution of control towards more dispersed control. To conclude, company characteristics have a greater impact than country characteristics on the company's decision to cross-list and are also better at explaining the change in the control structure post cross-listing.