The effect of cross listing on management forecast specificity and accuracy in the Netherlands
Abstract: We investigate management forecasts by Dutch firms in relation to cross listings by these firms in the US or the UK. Cross listings are associated with legal and reputational bonding, since firms with a cross listing in the US or the UK face greater legal liability exposure and closer scrutiny by financial intermediaries than do non-cross-listed firms. As a result, after obtaining the cross listing, these firms face greater potential costs of misrepresenting information. Our findings suggest that cross listing in a stricter environment influences management forecasts in terms of management forecast specificity, accuracy, and conservativeness in two opposite directions: although cross-listed firms make smaller forecast errors, their forecasts are less precise and more conservative. Our analysis of shareholder wealth effects shows that the net effect of the cross listing is positive upon the announcement of a management forecast.
|Keywords||Management forecasts, bonding, cross listing, forecast accuracy, forecast specificity|
|JEL||G34, Mergers; Acquisitions; Restructuring; Corporate Governance (jel), M41, Accounting (jel)|
de Jong, A, Mertens, G.M.H, & van der Poel, A.M. (2010). The effect of cross listing on management forecast specificity and accuracy in the Netherlands. Retrieved from http://hdl.handle.net/1765/33057