The Effect of Shareholder Litigation Risk on the Information Environment: The Case of Cross-Listed Firms

Sikochi, Anywhere

doi:10.2139/ssrn.2515091

SSRN Journal

2014

DOI: 10.2139/ssrn.2515091

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The Effect of Shareholder Litigation Risk on the Information Environment: The Case of Cross-Listed Firms

Anywhere Sikochi

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Cited by 4 publications

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“…The latter group is rarely specifically mentioned, but since companies can only act through people, it is a necessary element of the claim. 7 See generallySikochi (2014: 3) (citingLicht (2003),Siegel (2005),Licht et al (2013), & Leuz (2003). …”

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The Bonding Effect in Cross-Listed Chinese Companies: Is it Real?

Clarke

2015

SSRN Journal

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A common explanation offered for PRC companies' listing overseas is that they receive a price premium because listing overseas demonstrates a willingness to submit to the more shareholder-protective regulatory regime of the foreign jurisdiction and stock market. This explanation is commonly known as the bonding hypothesis. There is some empirical support for the proposition that listing overseas does indeed bring a price premium, although issues of causality are difficult to sort out. If it is true that investors view an overseas listing of a Chinese firm as something worth paying a premium for, the question remains, however, as to whether that view is well founded. Investors in overseas markets may find themselves left out in the cold when things go wrong, and indeed the Risk Factors section of PRC firms' IPO prospectuses routinely caution investors that successfully suing the company or its management will be difficult or impossible. This paper will examine the degree to which Chinese listed companies and their management do in fact, in a practical and realistic way, bind themselves to overseas state and market norms when such companies list abroad. It will argue that the actual binding effect of an overseas listing is small and that investors are mistaken to pay a premium for it. This conclusion, if correct, has at least two important implications beyond China. First, it casts into doubt the semi-strong form of the efficient capital markets hypothesis, because it means that there is publicly available information that does not seem to be adequately incorporated into stock prices. Second, it suggests that the bonding hypothesis needs to be examined on an empirical, country-by-country basis to see whether the bonding is in fact anything more than an illusion.The Bonding Effect in Cross-Listed Chinese Companies: Is It Real?

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The Bonding Effect in Cross-Listed Chinese Companies: Is it Real?

Clarke

2015

SSRN Journal

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Private Litigation Costs and Voluntary Disclosure: Evidence from Foreign Cross-Listed Firms

Naughton

Rusticus

Wang³

et al. 2014

SSRN Journal

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Shareholder Litigation and Management Earnings Forecasts

Houston

Lin

Liu³

et al. 2015

SSRN Journal

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The Effect of Shareholder Litigation Risk on the Information Environment: The Case of Cross-Listed Firms

Cited by 4 publications

References 51 publications

The Bonding Effect in Cross-Listed Chinese Companies: Is it Real?

The Bonding Effect in Cross-Listed Chinese Companies: Is it Real?

Private Litigation Costs and Voluntary Disclosure: Evidence from Foreign Cross-Listed Firms

Shareholder Litigation and Management Earnings Forecasts

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