This study examines the relationship between large shareholders and firm value and how this relation varies with the large shareholders’ power and incentive to expropriate a firm’s wealth. We find this relation is U shaped with the turning point at around 45% and 65% for the largest shareholders and total blockholders, respectively. The higher the power (or higher control right) means the more the expropriation or lower firm value. However, in firms with controlling blockholders (beyond 50% control right approximately), blockholders have enough power to manipulate firm’s activities but their incentive to expropriate decreases due to private benefits being lower. This study also finds that firms in high investor protection countries are associated with higher values than those in low investor protection countries for any blockholding level, but the difference in firm value between weak investor protection countries and strong investor protection countries is highest when expropriation by blockholders is largest.

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PurposeConsistent with an “absolute bonding hypothesis,” the benefits of listing on US exchanges experienced by cross-listed firms are accompanied by an increased risk of experiencing a spillover effect due to negative news within their industry. The purpose of this study is to test this form of the bonding hypothesis by analyzing the spillover effect to cross-listed firms when class action lawsuits are filed against their industry peers.Design/methodology/approachThe bonding hypothesis is tested by analyzing the spillover effect to non-sued cross-listed firms of class action lawsuits brought against US domestic firms in the same industry. The spillover effect is identified using cumulative abnormal returns around lawsuit filing dates from 1996 to 2020. A sample of matched non-sued cross-listed and domestic peer firms is evaluated in a cross-sectional analysis to identify country and firm-level characteristics that mitigate the negative spillover effect to cross-listed firms.FindingsWhile US firms realize significantly negative abnormal returns when class action suits are filed against their industry peers, the impact to cross-listed peers is statistically insignificant. In multivariate analyses, we show that the ability of cross-listed firms to avoid this negative spillover effect is stronger for firms with greater profitability that are headquartered in countries with better shareholder protections and governance characteristics.Originality/valueResults suggest that cross-listed firms may have a level of immunization from the negative industry spillover effect of class action lawsuits and, thus, exhibit only “partial bonding” to the US market.

PurposeThis study aims to empirically investigate how difference in social trust explains the heterogeneity of intellectual property right (IPR) protection (proxied by software piracy rate) across countries. Specifically, the authors also examine whether this effect is complementary or substitute to legal and economic factors.Design/methodology/approachThe authors use both ordinary least square and two-stage least square regressions to investigate this effect.FindingsThe authors find that there is also a complementary effect between trust and rule of law in reducing the violation of IPRs.Originality/valueAlthough the literature by now has documented the solid relationship between trust and the quality of formal institutions, only few studies have explored more specific measures of institutional consequences. Thus, this study is the first study investigating the role of trust, a valuable social capital dimension, on IPR protection.

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