This thesis explores the relation between control and cross-listing. Recent research found that countries in the common law system have good shareholder protection and encourage dispersed control. In contrast, countries in the civil law system provide weak protection of shareholders' rights and thus concentrated control arises in these countries. Accordingly, changes in the legal environment via cross-listing may affect the subsequent control structure. This thesis examines whether initial control determines the cross-listing location (civil law vs. common law markets) and the implications of the cross-listing for the future control structure. Our univariate analysis reveals a decline in control concentration for civil law companies that cross-list on common law markets and for common law companies that cross-list on common law or civil law markets. The results for civil law companies that cross-list on civil law markets show that the smaller large shareholders are more likely to decrease their voting power significantly after the cross-listing while there is no statistically significant decline in the largest shareholder's voting stake. We also estimate a logit to predict whether control pre cross-listing affects the choice of the cross-listing on civil law versus common law markets, after accounting for the classical motives for cross-listing. We find that a higher control concentration before the crosslisting increases the likelihood to cross-list on common law markets. This finding is a contribution to the cross-listing literature. In addition, we find that companies that have a large market capitalisation relative to their home market, low leverage and low share turnover are more likely to cross-list on common law markets. We also find that companies from countries with good accounting standards and good enforcement of laws tend to crosslist on common law markets. We specify an econometric model explaining whether the control structure after the crosslisting is influenced by the legal system of the cross-listing location. We do not find evidence that the control post cross-listing is affected by the legal rules of the host country. Instead, the control post cross-listing is mainly explained by company characteristics. This is consistent with the argument that efficiency considerations are the main determinants of the ownership structure. We also find that the better the quality of accounting standards in the home country, the lower is the control concentration. Our main conclusion is that the legal system of the host country is not the main factor that influences the control after the cross-listing. Instead, our findings reveal that the optimal control structure is chosen to reflect the company characteristics. Our findings contribute to the cross-listing literature by introducing a new motive for cross-listing, i. e. the control structure. Also, our results contribute to the literature on the link between performance and control by confirming that control is endogenous and not exogenous.
| Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:488040 |
| Date | January 2004 |
| Creators | Abdallah, Wissam |
| Publisher | University of Manchester |
| Source Sets | Ethos UK |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
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