U.S. cross-listings, the private benefits of control, and ownership structure
Bibliographic record
Abstract
Receipts (ADRs).At the end of 2001, there were 1,322 non-U.S.firms with sponsored ADR programs, including 623 that trade on the NYSE, AMEX, and Nasdaq, with a total trading volume of $752 billion.There are numerous benefits for firms that cross-list in the U.S., including an increase in firm value, an increase in visibility, investor recognition, and investor base, an increase in liquidity, and access to public and private equity capital.Much of the early literature on cross-listing focuses on the asset pricing implications of cross-listing and whether or not firms experience a decrease in their cost of capital as they overcome barriers to international investment (market segmentation).Recent research on cross-listing focuses on the corporate governance and legal aspects of listing in the U.S. Coffee (1999Coffee ( , 2001) ) and Stulz (1999) state that there are important disclosure, governance, and legal implications for non-U.S.firms that cross-list on a U.S. exchange.They argue that firms in countries with weak corporate governance laws and standards can use a U.S. listing to bond themselves to assure minority shareholders that they are less likely to be exploited.This premise is often referred to as the bonding hypothesis. U.S. listings and the private benefits of control.Cross-listing on a U.S. exchange via a Level 2 or 3 ADR program subjects foreign firms to governance systems, disclosure standards, accounting rules, and legal rules that are more rigorous than the standards they are subject to in their home country. 2 Because foreign firms that list their shares on a U.S. stock exchange (or Nasdaq) must register with the Securities and Exchange Commission, they become subject to mandatory U.S. legal standards that are embedded in federal securities laws and much of the discretion and potential for opportunistic actions that controlling shareholders can take under other legal regimes is sharply limited. 3Coffee (1999a) states that U.S. legal standards significantly limit the rights and advantages of controlling shareholders.U.S. securities laws not only seek to improve disclosure and financial reporting, they seek to reduce agency costs and inhibit controlling shareholders by imposing substantive obligations on them.For example, 2 A foreign firm can list its shares in the U.S. either by listing its shares directly or via an ADR program.There are various types of ADR programs that firms can choose from.Rule 144a ADRs are capital raising issues that are privately placed to qualified institutional buyers (QIBs) and trade over-the-counter among QIBs.Rule 144a issuers are not required to register under the Securities Act or the Exchange Act, exempting them from most civil liability provisions as well as S.E.C. disclosure requirements and U.S. GAAP accounting rules.Level 1 ADRs trade over-the-counter as 'Pink Sheet' issues.Minimal S.E.C. disclosure is required and home country accounting is allowed, although the statements must be in English.Level 2 ADRs are securities that trade on the NYSE or Nasdaq.Level 2 ADRs require full registration with the S.E.C. and firms must file an annual report on Form 20-F, which includes a reconciliation of financial statements to U.S. GAAP.The companies must also meet the minimum listing standards for foreign companies set by the U.S. exchanges.Level 3 ADRs are similar to Level 2 ADRs, but include a capital raising element in addition to the listing.Canadian firms that directly list on the Pink Sheets are treated as Level 1 ADRs, and the firms that directly list on the NYSE or Nasdaq are treated as Level 2/3 ADRs.See Karolyi (1998) for further details.
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.000 | 0.000 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.000 | 0.000 |
| Bibliometrics | 0.000 | 0.000 |
| Science and technology studies | 0.000 | 0.000 |
| Scholarly communication | 0.001 | 0.013 |
| Open science | 0.000 | 0.000 |
| Research integrity | 0.000 | 0.000 |
| Insufficient payload (model declined to judge) | 0.003 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one teacher head, not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".