Private Benefits of Control, Ownership, and the Cross-listing Decision

This is the peer-reviewed version of the following article: Doidge, C. , Karolyi, G. A., Lins, K. V., Miller, D. P. and Stulz, R. M. (2009), Private Benefits of Control, Ownership, and the Cross‐listing Decision. The Journal of Finance, 64: 425-466., which has been published in final form at doi:10.1111/j.1540- 6261.2008.01438.x . This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.This paper investigates how a foreign firm’s decision to cross-list on a U.S. stockexchange is related to the consumption of private benefits of control by its controlling shareholders. Theory has proposed that when private benefits are high, controlling shareholders are less likely to choose to cross-list in the United States because ofconstraints on the consumption of private benefits resulting from such listings. Usingseveral proxies for private benefits related to the control and cash f low ownershiprights of controlling shareholders, we find support for this hypothesis with a sampleof more than 4,000 firms from 31 countries.The Dice Center for Financial Economics, Social Sciences and Humanities Research Council of Canada. This research is supported by the NSF under Grant No. NSF-0215754