Cross-Listings and Voluntary Disclosure: International Evidence

Abstract

This paper examines changes in firms' disclosure behavior around cross-listings. Using an international setting, we find significant differences in management forecast likelihood and frequency between cross-listed firms and firms with similar characteristics but that are not cross-listed; particularly when differences in accounting standards between a cross-listed firm's home and target countries are larger. Further, we find that firms choosing to cross-list in target countries with larger accounting standards differences tend to provide more voluntary disclosure during the two years preceding a new cross-listing, rather than during the earlier time periods or the period after cross-listing, and such voluntary disclosure helps firms attract more foreign institutional ownership in their cross-listing target countries. Collectively, our evidence suggests that although differences in accounting standards across countries deter firms' cross-listing activities, cross-listed firms, by providing more management forecasts voluntarily, preemptively alleviate the information disadvantage faced by foreign institutional investors.