Foreign Listing Research Articles

Competence and enterprise of management as drivers of early foreign listing of medium-sized emerging market multinationals (EMNEs) from Africa

EMNEs from Africa are missing in global places and spaces, and Africapitalism is also meagrely represented within the capillaries of international investments, relative to the opportunities offered by globalisation and Africa’s rich natural resource endowment. Using the Penrosian MNE growth theory, we investigate how African firms' managerial competence and entrepreneurial behaviours can be enhanced by engaging foreign executive directors during pre, early and post-internationalisation. We conduct our analysis by using data from 157 companies domiciled in 17 African countries. Our results show that whilst access to liquidity, foreign managerial know-how, and experience are key drivers of early foreign listing of African EMNEs, these factors have less effect on corporate outcomes during the 3rd and 5th year without the moderating effect of foreign executive directors. We contribute to the international business and international entrepreneurship literature by showing that African EMNEs can succeed in global spaces if they leverage the expertise of foreign executive directors as they bring idiosyncratic industry and market knowledge during early internationalisation. EMNEs intending to internationalise must use a polycentric governing board structure to reflect the intended destination country. Our results imply that early listing on the international stock markets is among the key strategies latecomers use to enter a global game they are just learning to play.

The value of the PCAOB’s international audit oversight on U.S. listed foreign companies: Evidence from an initial enforcement breakdown

Using, as a natural experiment, the Public Company Accounting Oversight Board’s May 18, 2010, release stating that its oversight of certain foreign auditors had been denied, we examine investors’ early valuation of the PCAOB’s international audit oversight on U.S.-listed foreign companies. Comparing reactions for the release-exposed U.S.-listed foreign companies to reactions for other U.S.-listed foreign companies, we find a significant decline in the share values of the release-exposed companies. The decline is driven by companies with auditors from China; the on-list companies from the 19 on-list European jurisdictions do not experience significantly negative stock market reactions. Using difference-in-differences analyses of earnings response coefficients, abnormal stock returns and trading volumes surrounding earnings announcements, and analyst forecast dispersions, we find a decline in perceived financial reporting quality for the release-exposed foreign listings from China but not for the release-exposed companies from the 19 European jurisdictions—a finding in line with the results of the stock market reaction analyses. These results are consistent with the view that the PCAOB’s international inspection would create a net value for U.S.-listed companies from China.

Do Digital Technologies Add Value? The Role of Digital Diffusion in Foreign IPO Firms

In this article, we contribute to international IPO research on technology and institutions by investigating the relationship between digital strategic intents in initial public offering (IPO) prospectuses and the performance of foreign IPO firms going public in the United States (US). Despite the expectation of this foreign listing activity to convey digital quality, our theory and results suggest the digital adoption-use gap on both the firm and institutional level to create an uncertain digital diffusion process, an investment environment conveying low transparency, and a resulting IPO discount. We further explore contingencies of the chief executive officer’s (CEO) and board of directors’ technology expertise, investigating interrelationships among technology, institutions, upper echelon and foreign IPO performance. Considering uncertainties carried by the digital adoption-use gap, we find both contingencies to be negative moderators.

Threshold effects of financial development on foreign listing: the roles of venture capital in developed and emerging countries

ABSTRACT This paper examines financing abroad from the perspective of international financial development. We find that foreign listing activities are significantly associated with financial development indices, such as stock trading, domestic credit, soundness of banks, venture capital availability and financing by local equity markets. The spillover effect is more pronounced in emerging countries. A threshold model with a macro dynamic panel of 37 countries from 2006 to 2020 suggests that foreign listings and financial development (stock trading and venture capital availability) follow an inverted U-shaped pattern, while foreign listings and domestic credit follow a diminishing pattern. The policy and managerial implications indicate that countries face varying demands for foreign listings at different stages of financial development. When making decisions on seeking foreign capital policymakers should follow closely the changes in domestic financial development and institutions.

Determinants of Firm-Level Voluntary Corporate Disclosure in Emerging Markets: A Meta-Regression Analysis

The purpose of this paper is to determine which factors are most important in voluntary corporate disclosure at firm level in emerging markets. The study characteristics that cause differences in results in the original empirical studies are also examined. This study applies a meta- regression technique developed by Stanley and Jarrell (1989) to a sample of 32 empirical studies published between 2011 and 2020. The study findings reveal that the financial crisis variable, region of the study variable, and weighting of the dependent variable significantly affect study results of the original empirical researches. Moreover, the most important and robust determinants of corporate disclosure in emerging markets are board independence and foreign listing status. Study findings also indicate that firm size, which is identified by most empirical studies to be a significant and most robust determinant of corporate disclosure, to be insignificant in this meta-regression study. This study will help to resolve the ambiguity that has existed over the past decade in literature as to which factors are really important in voluntary corporate disclosure practices in emerging countries. Secondly, this study extends the literature relating to corporate disclosure practice in emerging countries.

Effects of founder CEO duality and board size on foreign IPOs’ survival in US markets

PurposeThis study aims to investigate how three critical governance decisions by foreign firms impacted their survivability post-initial public offerings (IPO): the choice of CEO (founder vs non-founder); the power the founder CEO wields relative to the board in terms of CEO duality; and board size.Design/methodology/approachThis study uses data from 86 foreign firms that completed IPOs in the US market between 2000 and 2008 and adopts a Cox proportional hazards model to examine how the founder, founder CEO duality and board size influence foreign firm delisting post-IPO.FindingsA founder CEO or a founder CEO with duality (i.e. when a founder CEO is also chair of the board of directors) does not support a foreign firm’s survival post-IPO. Expectedly, board size has a negative impact on post-IPO firm survivability; however, founder CEO duality positively moderates this negative relationship. Therefore, founder CEO duality plays a positive indirect role in the context of post-IPO firms with large boards.Originality/valueFirst, while the benefits of CEO duality have been empirically ambiguous, this study clarifies how founder CEO duality manifests its positive impacts in foreign listings. Second, by focusing on board cognition, this study confirms the negative impact of large boards, but highlights that this can be mitigated by governance leadership structure. Finally, despite organizational life-cycle theorists’ advocacy of the replacement of founder CEOs with professional CEOs in sizable ventures, this study shows the benefits of their retention when the board is large.

Entrepreneurship, financial development and threshold effects on foreign listings

Entrepreneurship, financial development and threshold effects on foreign listings

Internationalization through foreign listing: A review and future research agenda

This paper reviews and synthesizes literature on foreign listing from international business, management, and finance disciplines. A systematic review of 66 studies from 25 journals indicates fragmentation of the literature across the macro and firm-specific perspectives and a limited usage of current international business theories in research on foreign listing. We propose multiple developmental paths including use of institutional theory, especially institutional distance and institutional evolution to provide more comprehensive understanding of antecedents and contingent factors for foreign listing; supply-chain disaggregation of cross-border capital flow; integrate financial and strategic implications of foreign listing; and advancement of emerging market specific theories.

Determinants of Tax Planning: Theoretical Analysis

Annotation. Tax planning is a topic of interest for taxpayers, practitioners, public authorities and academics. Analyzing scientific literature on tax planning shows that some authors are looking at the tax planning process, while others are looking at the factors that determine tax planning. Although there are a number of scientific literature analysing these factors, it is noted that there is a need to systematize this literature. The purpose of the article is to identify the determinants of tax planning activities in companies and households. Methods used in the article: systematic analysis of scientific literature, systematization of information, comparison, generalization. After analyzing the scientific literature, authors provide a concept of tax planning and selected determinants that encourage and inhibit the involvement of both types of taxpayers in tax planning activities. After a theoretical analysis, it was found that corporate tax planning is influenced by the company's profitability, profit begor taxes, internationalisation, the scale of foreign operations, listing, capital receptivity and growth, development, size and leverage of the company, optimism of the company CEO, experience of his military service, lobbying, reputation and financial accounting issues. Household tax planning is influenced by taxpayers' age, income, intra-household income inequality, experience, a compendium tax system, its complexity, fines, the likelihood ofecassionisation. Religiousity is a factor that hampers the involvement of both businesses and households in tax planning activities.
 
 Keywords: tax planning, determinants, tax avoidance, households, company.
 JEL Code: H26

The Impact of Firm Characteristics on Corporate Financial Performance in Emerging Markets

This study investigates the impact of firm characteristics on the financial performance of companies listed on the Egyptian stock market. Regression model was performed to regress six firm characteristics variables, namely firm size, foreign listing, age, leverage, liquidity, and assets tangibility. The study controlled for five more variables related to corporate governance including board size, board independence, CEO role duality, audit committee, and the quality of external auditor to avert their effect on financial performance. The study used both accounting measures such as return on assets (ROA) and return on equity (ROE) and market-based Tobin's Q Ratio for measuring financial performance. The findings generally indicate that firm characteristics have an impact on both accounting financial performance as measured by ROA or ROE and market-based financial performance as measured by Tobin's Q, with little difference in the level of such impact. These findings revealed that firm characteristics affect corporate financial performance as evaluated by the company or the market.

The Role and Impact of International Financial Reporting Standards on Cross-Border Financing for a Systemically Important Bank from Macroeconomic Perspectives—Technical Review Research Study

The author of the study note that the extensiveness of a country’s international accounting disclosure requirements is a good for the overall disclosure extensiveness of the exchange in that foreign country, which, in turn, is bigly correlated with the cost of listing such as United States, Canada, United Kingdom, The Netherlands, France, Japan, and Germany. The United States and the national over-the-counter market have enjoyed significant growth in foreign listing. In absolute terms, the U.S. numbers are even more impressive. As of December 2019, the 1,420 foreign companies whose shares are traded in the United States reparent the largest amount of foreign listings of any major stock exchange in the world., which reflects, at least in part, recognition by multinational entities that the U.S. securities market represents the most efficient market in the world, thus translating into a lower cost of capital for issuer of securities. This technical research review article may support both the public trade companies and policymakers around the World.

Cross-Country Competitive Effects of Cross-Listings

Abstract We study competitive effects of foreign listings on U.S. stock exchanges over a 50-year period and show that U.S. rival firms respond strongly negatively (weakly positively) to foreign listings (delistings). The performance decline of U.S. firms is related to the competitive advantages that foreign firms receive from their cross-listings, such as stronger financial benefits, higher growth prospects, and better visibility, rather than market or industry valuation timing or existing market competition. This decline is especially pronounced when cross-listings come from proximate or developed markets. Our findings highlight an important role of international markets in influencing the performance of U.S. firms. Received February 19, 2019; editorial decision September 18, 2019 by Editor Isil Erel. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Reputation Effect of Foreign Listing: Spillovers of Parent Reputation

Reputation Effect of Foreign Listing: Spillovers of Parent Reputation

Do investors care about earnings quality? The case of Chinese reverse mergers

This study examines a panel of U.S.-listed Chinese reverse merger firms to address the question whether, and to what extent, earnings quality is valued by investors. Empirical evidence indicates that U.S.-listed Chinese reverse merger firms tend to have much lower earnings quality as compared to both U.S.-listed Chinese IPO firms and ADR firms, as measured by both the absolute value of discretionary accruals and the accruals quality. This fundamental difference, however, is reflected in neither firm valuation nor stock performance, suggesting that investors do not pay enough attention to the integrity of financial information of foreign listings in general and reverse merger firms in particular.

The Impact of Local Sector Information on the Performance of Single Listed Foreign Stocks

Being an instrument for international diversification, the populations of Single listed foreign stocks are growing in major capital markets. Since this is a new trend of foreign listing, both investors and issuers may have concerns about the characteristics of these stocks. This paper focuses on thesetypes of stocks from two different sectors (HealthCare and Technology) which are originated from PRC (Peoples Republic of China) and listed only on the US markets. The sample employs 24 companies’ stock returns in the period of May 2011 to August 2013. Correlation test and Granger causality test are applied to identify the relationships and beyond that, the Bivariate Co-integration test and Impulse Response Function test are applied to identify the nature of the relationships between the stocks and both the home and the US market (Sector Index). The study reveals that these single listed stocks do not have any long term effect from both the Home and the Foreign trading markets whereas, the stocks are highly responsive towards the shocks from US markets in a very short term.

Domestic versus foreign listing: Does a CEO's educational experience matter?

Where to list an initial public offering (IPO) is a critical decision for an entrepreneurial firm. Our study investigates IPO location choice between home country and foreign country by examining a sample consisting of the entire population of 1479 Chinese private issuers during the period from 2005 to 2014. We enrich upper echelons theory by bringing in the insights of imprinting theory. Our results indicate that the sources of imprint − prestigious domestic education and foreign education − influence CEOs' preference for an IPO location. More specifically, CEOs with prestigious domestic degrees tend to list their firms in China whereas CEOs with foreign degrees tend to list outside China. Given that the imprinting effects of education have a lasting influence on CEOs, despite subsequent environmental changes, long tenures allow such effects to be imparted to other top management team members. Another finding is that when the CEOs are also the founders, there are two separate imprinting effects.

Lost in translation? Corporate governance, independent boards and blockholder appropriation

Emerging economies are oftentimes characterized by state capitalism, concentrated ownership and constrained resources, where firms face underinvestment due to resource misappropriation. The adoption of Anglo-American corporate governance practices may result in sub-optimal outcomes. We draw on the multiple agency perspective and research on cross-national governance to examine how independent directors, as agents with multiple roles, might mitigate blockholder appropriation. Using unique panel data from Russian publicly traded firms where the government and the business elite are predominant blockholders, we find that independent directors in private firms are less effective in mitigating blockholder appropriation than in state-owned enterprises. We further investigate board independence effects driven by the exposure to three international governance boundary conditions, namely Russian Multinational Enterprises, foreign listings of Russian firms, and foreign independent directors on Russian boards. Our study focuses on the agents that might assuage principal-principal conflicts, explores when ineffective governance can be minimized, and contributes to research on how governance practices developed in advanced economies get translated in emerging market economies.

Does Foreign Listing Matter in Cross-border M&A of Emerging Market MNEs?

Prior research suggests that foreign listing may play a crucial role in attenuating liability of foreignness, but many of its implications are yet to be discussed thoroughly, for instance, the contexts and mechanisms that financial distance affect strategies of emerging market multinational enterprises (MNEs). In this study, we examine the effect of heterogeneity in financial market orientation on cross-border transactions, focusing on the price premiums of cross-border mergers and acquisitions (M&A). Using in-depth data concerned with specific cross-border M&A deals, this study suggests as the gap of financial market orientation between acquirer¡¯s home country and host country increases, the MNEs from emerging markets are more likely to bear high price premiums. At firm level, when acquirers are listed in foreign stock exchanges, they are supposed to pay lower premiums. Furthermore, the effect of foreign listing can also negatively moderate the positive relationship between financial market orientation gap and cross-border M&A premiums. When considering the role of prior host country M&A experience of the acquirer, we find this type of experience negatively moderates the positive relationship between financial market orientation gap and cross-border M&A premiums of emerging market MNEs, while the moderating effect of prior host country M&A experience on the relationship between foreign listing and cross-border M&A premiums of emerging market MNEs shows no significant results.

Evaluating the Contribution of North American Zoos and Aquariums to Endangered Species Recovery

The challenge of recovering threatened species necessitates collaboration among diverse conservation partners. Zoos and aquariums have long partnered with other conservation organizations and government agencies to help recover species through a range of in situ and ex situ conservation projects. These efforts tend to be conducted by individual facilities and for individual species, and thus the scope and magnitude of these actions at the national level are not well understood. Here we evaluate the means and extent to which North American zoos and aquariums contribute to the recovery of species listed under the U.S. Endangered Species Act (ESA), by synthesizing data from federal recovery plans for listed species and from annual surveys conducted by the Association of Zoos and Aquariums. We found that in addition to managing ex situ assurance populations, zoos frequently conduct conservation research and field-based population monitoring and assessments. Cooperatively managed populations in zoos tend to focus on species that are not listed on the ESA or on foreign listings, and thus it may be beneficial for zoos to manage more native threatened species. Our results highlight the existing contributions, but also identify additional opportunities for the zoo community to help recover threatened species.

Alternative Governance and Corporate Financial Fraud in Transition Economies: Evidence From China

How corporate governance mechanisms function in transition economies is a key topic for corporate governance researchers and policy makers. We propose that alternative governance mechanisms are in place to mitigate corporate fraudulent behaviors in the fluid state of transition economies where the establishment and enforcement of corporate governance legislation are presently insufficient. Drawing on the twin set of institutional logics—the institutional embeddedness logic and the institutional substitution logic—we posit that three salient types of prevailing alternative governance mechanisms (relational, administrative, and foreign governance) play important roles in transition economies because they are complementary to the institutional conditions at the time of the transition process. Conducting a bivariate probit analysis of a matched sample of corporate financial fraud cases in China, we find that strategic alliances, business group affiliation, nontradable state shares, local government ownership, use of foreign auditors, and foreign listing can deter corporate financial fraud, while foreign listing is also effective in detecting fraud. We also find that the deterrence effects of strategic alliances and business group affiliation become weaker as law development improves, while foreign listing and legal governance are completely substitutive. Our study provides a contextualized view of corporate governance that connects its effectiveness with institutionalization and the institutional state of a country. Our study also enriches our understanding of some unfamiliar forms of governance mechanisms that are in place and complementary to a country’s institutional conditions.