Private Benefits and Cross-Listings in the United States

Evangelos Benos, Michael S. Weisbach

NBER Working Paper No. 10224
Issued in January 2004
NBER Program(s):Corporate Finance

In this paper, we review the literature on private benefits and cross-listings in the United States. We first discuss the alternative approaches used to measure private benefits. We survey recent evidence documenting cross-country differences in the levels of private benefits obtained by corporate managers, as well as the country-specific factors associated with high and low private benefits. We then explain how, by cross-listing its stock in a market with high disclosure and regulatory standards such as the United States, a firm can commit to a relatively low level of private benefits in the future. We discuss the circumstances under which managers would choose to cross-list their stocks in the United States, when such a cross-listing has important implications for managers' private benefits. Finally, we survey recent empirical work that tests empirical implications of this bonding view of cross-listings. Overall, this evidence provides a compelling case that the desire to protect shareholders' rights so as to facilitate access to equity markets is one of a number of reasons why firms choose to cross-list their stocks in the United States.

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Document Object Identifier (DOI): 10.3386/w10224

Published: Benos, Evangelos and Michael S. Weisbach. "Private Benefits And Cross-Listings In The United States," Emerging Markets Review, 2004, v5(2,Jun), 217-240. citation courtesy of

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