Spillover Effect of Cross-Listings: Evidence From Corporate Social Responsibility

Using a large sample of US firms that cross-listed their securities in foreign countries, we find that the non-cross-listing firms tend to improve their corporate social responsibility (CSR) performance in response to their peers’ cross-listing decision. Moreover, our results show that the significant finding is primarily driven by non-cross-listing firms with peers cross-listed in foreign countries with higher levels of CSR awareness relative to that of the United States following their peers’ cross-listing decision. We further find a positive relationship between non-cross-listing firms’ CSR performance and the proportion of cross-listing firms in a region or an industry. This relationship is more (less) pronounced for leading (non-leading) non-cross-listing firms in the same region or industry. Overall, our findings lend support to the argument that firms’ decision to cross-list has a positive spillover effect on their non-cross-listing peers’ CSR performance and ultimately can improve stakeholders’ welfare in general.