The role of future time reference in cross-listing decisions: Cross-country evidence

Abstract

This paper examines the impact of language on firms’ cross-listing decisions. Utilising the survival analysis on data from 28,602 firms in 44 countries, we hypothesise and find that firms whose operational languages do not grammatically distinguish the future from the present are more likely to cross-list as its first listing destination. After integrating crucial controls, adding various fixed effects, and conducting extensive robustness checks, this relationship remains consistent. Our additional analysis reveals that speakers of such languages on average exhibit stronger long-term orientated thinking, thus predisposing them to benefit from stringent regulations, reduced capital cost, and broader investor base, especially in countries with robust governance. This observation further supports the ‘bonding theory’ and ‘linguistic relativity theory’. Collectively, our research highlights the importance of the linguistic dimension in driving corporate financial decisions.