Listing Advantages Around the World

Author Name UEDA Kenichi (University of Tokyo / TCER / CEPR) / Somnath SHARMA (University of Tokyo / Reserve Bank of India)
Creation Date/NO. June 2020 20-E-060
Research Project Study Group on Corporate Finance and Firm Dynamics
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Using the firm-level data of 33 countries over 10 years (2008-2017), we find that the listed firms have lower returns on assets than the similar unlisted firms, in most countries. The result is associated with a higher capital-labor ratio of listed firms, implying that listed firms face fewer financial constraints. Moreover, we investigate the institutional factors that exacerbate or mitigate the listing advantages (i.e., ROA difference) across the countries. Compared to English origin law, countries with German and Scandinavian legal origins strongly narrow the listing advantages but the French legal origin shows mixed results. Overall, the listing advantages seem narrowed with stronger creditor's rights, but show unclear associations with the strength of corporate governance.