We examine the impact of improved investor protection due to cross-listing on foreign firms’ investment decisions and firm value. While we find that cross-listing increases firms’ capital expenditures and mergers and acquisitions activities, cross-listed firms also invest more in research and development, make better acquisition decisions, and have higher profitability compared to non-cross-listed firms. Moreover, cross-listing is associated with better cash utilization by foreign firms for investments. These improvements in investments and cash utilization are more pronounced for firms cross-listed on US exchanges and for firms from countries with weak investor protection laws."> We examine the impact of improved investor protection due to cross-listing on foreign firms’ investment decisions and firm value. While we find that cross-listing increases firms’ capital expenditures and mergers and acquisitions activities, cross-listed firms also invest more in research and development, make better acquisition decisions, and have higher profitability compared to non-cross-listed firms. Moreover, cross-listing is associated with better cash utilization by foreign firms for investments. These improvements in investments and cash utilization are more pronounced for firms cross-listed on US exchanges and for firms from countries with weak investor protection laws."> We examine the impact of improved investor protection due to cross-listing on foreign firms’ investment decisions and firm value. While we find that cross-listing increases fir">
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Investor Protection, Investment Efficiency and Value: The Case of Cross-Listed Firms

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  • Chinmoy Ghosh
  • Fan He
Abstract
type="main"> We examine the impact of improved investor protection due to cross-listing on foreign firms’ investment decisions and firm value. While we find that cross-listing increases firms’ capital expenditures and mergers and acquisitions activities, cross-listed firms also invest more in research and development, make better acquisition decisions, and have higher profitability compared to non-cross-listed firms. Moreover, cross-listing is associated with better cash utilization by foreign firms for investments. These improvements in investments and cash utilization are more pronounced for firms cross-listed on US exchanges and for firms from countries with weak investor protection laws.

Suggested Citation

  • Chinmoy Ghosh & Fan He, 2015. "Investor Protection, Investment Efficiency and Value: The Case of Cross-Listed Firms," Financial Management, Financial Management Association International, vol. 44(3), pages 499-546, September.
    • Handle: RePEc:bla:finmgt:v:44:y:2015:i:3:p:499-546
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    4. Rufei Ma & Xu He & Xin Xiang, 2022. "Cross‐listing on the Hong Kong Exchange and Chinese firm innovation: New evidence," Australian Economic Papers, Wiley Blackwell, vol. 61(2), pages 365-393, June.
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    6. Abdallah, Abed AL-Nasser & Abdallah, Wissam, 2019. "Does cross-listing in the US improve investment efficiency? Evidence from UK firms," The Quarterly Review of Economics and Finance, Elsevier, vol. 72(C), pages 215-231.
    7. Gordon, Elizabeth A. & Hsu, Hsiao-Tang & Huang, Huichi, 2020. "Peer R&D disclosure and corporate innovation: Evidence from American depositary receipt firms," Advances in accounting, Elsevier, vol. 49(C).
    8. Sumiyana Sumiyana & Ainun Na’im & Firdaus Kurniawan & Albertus H. L. Nugroho, 2023. "Earnings management and financial distress or soundness determining CEOs’ future over- and under-investment decisions," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-10, December.
    9. Xiaopeng Wang & Xueyao Shen & Yongliang Yang, 2020. "Does Environmental Information Disclosure Make Firms’ Investments More Efficient? Evidence from Measure 2007 of Chinese A-Listed Companies," Sustainability, MDPI, vol. 12(5), pages 1-16, March.
    10. Alam, Ashraful & Uddin, Moshfique & Yazdifar, Hassan, 2019. "Institutional determinants of R&D investment: Evidence from emerging markets," Technological Forecasting and Social Change, Elsevier, vol. 138(C), pages 34-44.
    11. Alam, Ashraful & Uddin, Moshfique & Yazdifar, Hassan & Shafique, Sujana & Lartey, Theophilus, 2020. "R&D investment, firm performance and moderating role of system and safeguard: Evidence from emerging markets," Journal of Business Research, Elsevier, vol. 106(C), pages 94-105.

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