Three essays in international finance

Using a sample of newly initiated American Depository Receipt (ADR) programs over the period 2000 and 2004, this paper examines the effect of Sarbanes-Oxley Act (SOX) on the cross-listing decision and the value consequences of cross-listing by foreign firms. We find that the passage of SOX did not significantly lower the propensity of foreign firms to cross-list their shares on U.S. financial markets. However, we show that the adoption of SOX: (i) increased (decreased) the likelihood of cross-listing by firms from countries with civil (common) law legal systems; (ii) induced firms from civil (common) law countries to cross-list their shares primarily on the OTC (exchange); and (iii) raised the value of cross-listing on the OTC making its difference from exchange market listing insignificant. Our results suggest that post-SOX, foreign firms from common law countries sought functional convergence through legal bonding by cross-listing on an exchange but were deterred by the mandated corporate restructuring as well as legal and administrative costs associated with SOX compliance and elected to cross-list in alternative global financial market venues instead. For foreign firms from civil law countries for whom functional convergence with U.S. financial markets through reputational bonding was sufficient, the strengthened corporate governance environment from SOX encouraged cross-listing on the OTC.;Last, I study the legal and culture determinants of cross-border joint ventures with one US and one foreign partner. On the country level, countries with weaker legal regulatory environment and countries with higher cultural disparity from US, high degree of US FDI and low level of total import and export, are characterized with high volume of joint ventures. My results also suggest that joint ventures with a US partner are more likely in cases of vertical integration and technology transfer. Overall, the results suggest that cross-border joint ventures are optimal low cost organizational form especially in environments with larger market imperfections and that cross-border joint ventures minimize the cost of information asymmetry.;Furthermore, I study the incremental impact of Sarbanes-Oxley Act (SOX) on the determinants of ADR terminations between 2000 and 2004. My results suggest that the implementation of SOX increased the propensity of foreign firms to terminate their ADR programs and decreases the length of existence of the ADR programs. Before the implementation of SOX, firms with high Market-to-Book and high Sales Growth are less likely to delist from U.S. capital markets. After the implementation of SOX high Market-to-Book and Sales Growth firms are more likely to delist and the increased propensity of firms with high Sales Growth to delist after SOX is attributable primarily to firms from common law countries. After the implementation of SOX, exchange listed ADR programs are more likely to be terminated compared to non-exchange ADR programs.