حفاظت از منافع اقلیت سهامداران، کراس لیست در ایالات متحده و عرضه سهام متعاقب

This paper examines the hypothesis that non-US firms cross-list in the United States to increase protection of their minority shareholders. Cross-listing on the NYSE or Nasdaq subjects a non-US firm to a number of provisions of US securities law, and requires the firm to conform to US GAAP. It therefore increases the expected cost to managers of extracting private benefits, and commits the firm to protect minority shareholders’ interests. The expected relation between the quantity of cross-listings and shareholder protection in the home country is ambiguous, because managers will consider both expected private benefits and the public value of their shares. However, there are clear predictions about the relation between subsequent equity issues, shareholder protection, and cross-listings: (1) Equity issues increase following all cross-listings, regardless of shareholder protection. (2) The increase should be larger for cross-listings from countries with weak protection. (3) Equity issues following cross-listings in the US will tend to be in the US for firms from countries with strong protection and outside the US for firms from countries with weak protection.

An implicit but often unrecognized part of any financial contract is the ability of a legal system to enforce it. The quality of legal protection affects the ability of parties to expropriate resources from one another ex post, and thus influences the contracts that will be observed ex ante. Differences across countries in the quality of protection they provide claimholders should, by this logic, lead to observable differences in financial contracting. In fact, recent empirical work documents that such international contracting differences exist and are substantial (see in particular La Porta et al (1997) and La Porta et al (1998)). In countries where legal protections for minority claimholders are weak, it is considerably more difficult for a firm to raise external capital than for a similar firm in a country that protects minority interests well. Coffee (1999a) and Stulz (1999) argue that firms wishing to raise capital respond by bonding themselves to protect the interests of their minority stockholders. One way to accomplish this bonding is to cross-list on an exchange (NYSE or Nasdaq) in the United States, whose legal system protects minority shareholder interests as well as any in the world. Such a cross-listing obligates the firm to conform to generally accepted accounting principles (US GAAP), to file reports with the US Securities and Exchange Commission (SEC), to comply with the requirements of the exchange on which it lists, and at least to some extent conform to US securities laws. It thus provides a mechanism by which foreign firms can voluntarily subject themselves to some shareholders’ protections under US securities laws. For firms that want access to US capital markets without the voluntary bonding, the over-the-counter (OTC) market (also known as the Pink Sheets) and PORTAL (the market for firms issuing equity under SEC Rule 144a) provide such an opportunity.1 In this paper, we examine the extent to which such voluntary bonding explains cross-listing behavior. We first develop hypotheses concerning the expected relations between cross-listings, shareholder protection, and equity offerings. A manager considering cross-listing a firm's stock in the US, when such a cross-listing has potential implications for shareholder protection, must consider a number of factors in such a decision. First, one must consider the costs and benefits from the change in shareholder protection. Second, there are previously noted benefits of cross-listing, such as overcoming the obstacles of segmented markets (Stulz, 1981; Alexander et al (1987) and Alexander et al (1988); Errunza and Miller, 2000) and the problem of investor recognition (Merton, 1987; Foerster and Karolyi (1999) and Foerster and Karolyi (2000)). These arguments imply that the expected relation between cross-listings and shareholder protection is theoretically ambiguous. However, the predictions regarding equity issues are clear: Equity issues should increase following all cross-listings, and the increase should be larger when the cross-listing increases shareholder protection. In addition, equity issues following cross-listings in the US from countries that protect shareholders well should be primarily in the US, while equity issues following cross-listings from countries with poor protection should occur in all countries. We examine these hypotheses using a database of cross-listing firms and their history of equity issues. We first consider the relation between cross-listings and shareholder protection. Univariate statistics suggest that firms with weak protection at home are more likely to cross-list; however, when we control for other factors such as firm size, this relation is reversed and cross-listings are more common from firms with strong protection at home.

As capital markets have developed internationally, the decision of where a firm should list its securities has become an increasingly important choice for firms. It is well-recognized that legal protections of shareholder interests can affect valuations and the ability to raise capital externally (see La Porta et al (1997), La Porta et al (1998) and La Porta et al (1999); Grinblatt and Titman, 1998, p. 8). Cross-listing in the United States affords shareholders of non-US firms a number of legal protections, including the ability to free-ride on shareholder lawsuits of US shareholders for fraudulent statements made anywhere in the world, and requirements that the firm follow US GAAP, register with the SEC, comply with exchange rules, and follow a number of takeover procedures that have the effect of benefiting small shareholders. Coffee (1999a) and Stulz (1999) suggest that the ability to cross-list allows a firm to influence the legal regime under which it operates. This explanation for cross-listing complements other explanations discussed in the literature (see Karolyi, 1998). This paper evaluates the argument that one reason why non-US firms choose to cross-list in the United States is the protection of minority shareholder rights associated with SEC registration. When cross-listing potentially affects the ability to extract private benefits, a manager considering cross-listing must consider a number of factors. Such a manager must balance the loss of private benefits with the benefits of increased access to foreign markets and an increase in shareholder protection. Thus, the expected empirical relation between cross-listings and incremental shareholder protection is ambiguous. However, there are clear predictions regarding cross-listings, shareholder protection, and subsequent equity issues: Equity issues should increase following cross-listings, and the increase should be larger when protection rises with the cross-listing. When a cross-listing firm comes from a country that already has a high level of shareholder protection, any increase in subsequent equity issues should primarily occur in the country of the cross-listing, since the purpose of the cross-listing would have likely been to overcome market segmentation and/or increase liquidity. In contrast, following cross-listings of firms from countries with weak shareholder protection, the increase in subsequent equity issues should not necessarily be concentrated in the country of the cross-listing, but will be more likely to occur in the firm's home country and elsewhere. In this paper, we examine these hypotheses using a database of cross-listing firms and their history of equity issuance. Not surprisingly given the ambiguous nature of the theory, the empirical relation between cross-listings and shareholder protection is unclear. We document a large increase in both the number and value of equity offerings following cross-listings. Firms from countries with weak shareholder protection are more likely to issue subsequent equity following their cross-listing than are firms from countries with strong shareholder protection. Conditional on issuing equity, firms with weak protection in their home country issue it in larger quantities.