The boundaries of the law: can US private enforcement discipline foreign firms?

IF 8.6 1区 管理学 Q1 BUSINESS Journal of International Business Studies Pub Date : 2024-10-25 DOI:10.1057/s41267-024-00746-y
Massimo Massa, Xiaoqiao Wang, Bohui Zhang, Hong Zhang
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Abstract

Existing studies tend to focus on how a legal system reinforces the efficiency of its domestic firms or foreign companies that are subject to its domestic jurisdiction (e.g., via cross-listing). Our study provides critical normative implications in the era of financial globalization by showing that the influence of a country’s legal institutions extend beyond its territorial boundaries. We examine whether US shareholder-initiated class action lawsuits can discipline non-US firms. Using an international sample of firms over the period 1994–2019, we find that a US class action lawsuit against a non-US firm cross-listed in the US negatively affects the value of its non-US-listed industry peers. The effect is robust in both event-based analyses for short-term market reaction and stacked difference-in-difference analyses for long-term valuation. We uncover two economic mechanisms underlying this effect: information sharing and policy coordination between the US and the non-US firm’s home country. Specifically, the cross-border disciplining effect is more pronounced for firms from countries that lack information and that coordinate with the US at the policy level. Moreover, non-US peer firms subsequently improve their governance practices and financial policies to restore shareholder value. Our findings suggest that private enforcement in the US has a worldwide influence.

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法律的边界:美国私人执法部门能否约束外国公司?
现有研究倾向于关注一个法律体系如何加强其国内公司或受其国内管辖的外国公司的效率(如通过交叉上市)。我们的研究表明,一国法律制度的影响力超出了其领土边界,从而为金融全球化时代提供了重要的规范意义。我们研究了美国股东发起的集体诉讼是否能约束非美国公司。利用 1994-2019 年间的国际公司样本,我们发现针对在美国交叉上市的非美国公司的美国集体诉讼会对其在非美国上市的同行业公司的价值产生负面影响。无论是对短期市场反应进行基于事件的分析,还是对长期估值进行叠加差分分析,这种影响都是稳健的。我们发现了这种效应背后的两种经济机制:美国与非美国公司母国之间的信息共享和政策协调。具体来说,对于来自缺乏信息并在政策层面与美国协调的国家的企业来说,跨境约束效应更为明显。此外,非美国同行企业随后会改善其治理实践和财务政策,以恢复股东价值。我们的研究结果表明,美国的私人执法具有全球影响力。
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来源期刊
CiteScore
16.20
自引率
10.30%
发文量
84
期刊介绍: The Selection Committee for the JIBS Decade Award is pleased to announce that the 2023 award will be presented to Anthony Goerzen, Christian Geisler Asmussen, and Bo Bernhard Nielsen for their article titled "Global cities and multinational enterprise location strategy," published in JIBS in 2013 (volume 44, issue 5, pages 427-450). The prestigious JIBS Decade Award, sponsored by Palgrave Macmillan, recognizes the most influential paper published in the Journal of International Business Studies from a decade earlier. The award will be presented at the annual AIB conference. To be eligible for the JIBS Decade Award, an article must be one of the top five most cited papers published in JIBS for the respective year. The Selection Committee for this year included Kaz Asakawa, Jeremy Clegg, Catherine Welch, and Rosalie L. Tung, serving as the Committee Chair and JIBS Editor-in-Chief, all from distinguished universities around the world.
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