Cross-listing, host country institutions, and firms’ CSR performance

Abstract

In this paper, we examine whether and how the CSR performance of U.S. firms is impacted by the institutional characteristics of host countries following the cross-listing of their securities in foreign countries (i.e., cross-listing host countries). Employing a difference-in-differences analysis, we find that U.S. firms cross-listed in foreign countries tend to exhibit improved CSR performance compared with their U.S. non-cross-listed counterparts. Through the use of cross-sectional analyses, we find that the CSR performance of U.S. firms cross-listed in foreign countries varies positively with the host countries’ level of CSR awareness and stakeholder embeddedness. Further analysis suggests that if the cross-listed firms have a greater level of foreign revenue, the relationship between country-level institutions and the CSR performance of U.S. firms cross-listed in foreign countries, is stronger. This is also the case for firms with a higher level of customer awareness. Overall, the findings of this study lend support to the stakeholder learning hypothesis.