Can Foreign Firms Bond Themselves Effectively by Renting U.S. Securities Laws?

The study tests the functional convergence hypothesis, which states that foreign firms can leapfrog their countries’ weak legal institutions by listing equities in New York and agreeing to see front matter r 2004 Elsevier B.V. All rights reserved. .jfineco.2004.02.001 or wishes to thank Don Lessard, Simon Johnson, Tarun Khanna, Jack Coffee, John de raig Doidge, Art Durnev, Alexander Dyck, Bob Gibbons, Arnoldo Hax, Timothy Heyman, son, Amir Licht, Michael Piore, Alfred Plotkin, Roberto Rigobon, Andrei Shleifer, Daniel rd Siegel, Andrei Simonov, Scott Stern, Michael Weisbach, Daniel Wolfenzon, Chris anonymous referee, and participants in the 2003 Annual Meeting of the American Finance the IESE Global Conference 2003, the MIT organizational economics lunch seminar, the iversity Seminar on Latin American Political Economy, the Asian Institute of Corporate 2nd Annual Conference, the Academy of International Business annual conference, the MIT ch Seminar, the 2002 International Strategy Conference at the University of Michigan ool, and seminar audiences at Michigan, NYU, George Washington University, and University in St. Louis for helpful comments and criticisms on earlier versions of this paper. lso wishes to thank Guillermo Babatz, Yxa Bazan, Gustavo Bello, Vı́ctor Cárdenas, Gonzalo ichael Chafkin, Andrés Conesa, Efrén del Rosal, Daniel Eppelsheimer, Beatriz Estrada, es, Catherine Friedman, Brian Gendreau, Altagracia Gutierrez, Ángeles Hewett, Josefina lina Jaime, S.P. Kothari, Raúl Livas, Florencio Lopez-de-Silanes, Sylvia Maxfield, Todd dia Pacheco, Michael Pavelecky, Enrique Pérez Alonso, Gaspar Quijano, Humberto Real, Andrew Thompson, Lester Thurow, Theresa Tobin, Eduardo Trigueros, and 116 attorneys ases with cross-listed foreign firms for their advice and support during the process of data e author acknowledges the financial support of the Division of Research at Harvard Business lso expresses gratitude to Isela Nuñez, Erick Torres, and the Torres family for their logistical d hospitality during data collection. The usual caveat applies. 7-495-6303; fax: +617-496-6859 dress: [email protected] (J. Siegel).