U.S. Security Laws and Delistings

Khan, Hassaan (2017) U.S. Security Laws and Delistings. Journal of Banking and Finance. ISSN 0378-4266 (Accepted)

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Abstract

Foreign firms often cite strict and costly regulations as the main reason for delisting from the U.S. market. Using financial data from 2002 – 2012, we find that securities regulations in the U.S. make foreign firms risk averse as measured by their decline in R&D and capital expenditures. Such firms shift towards low risk and low returns investments. Foreign firms whose cash holdings exceed investment expenditures have fewer growth opportunities in the U.S. These firms exhibit less profitability, less liquidity, high leverage with concentrated portfolio, and subsequently depart the U.S. market when confronted with a stigma of criminal prosecution. Capital intensive industries have the highest proportion of delisting. JEL Classification: G15, G32

Item Type: Journal Article
Keywords: Foreign Firms, Security Law, Risk, Sarbanes-Oxley Act, Dodd-Frank Act
Faculty: Lord Ashcroft International Business School
Depositing User: Unnamed user with email hassaan.khan@anglia.ac.uk
Date Deposited: 08 Feb 2017 14:25
Last Modified: 21 Sep 2017 13:45
URI: http://arro.anglia.ac.uk/id/eprint/701432

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