Do political institutions affect the choice of the U.S. cross-listing venue?

We study the impact of political institutions on foreign firms'choice of their U.S. cross-listing venue. Using two measures of thequality of political institutions (the political rights index and thepolitical constraint index) and controlling for various firm-leveland country-level characteristics, we show that foreign firms fromcountries with weak political institutions are more likely to crosslist in the U.S. via the over-the-counter market and less likely tocrosslist on one of the main U. S. exchanges. Further, we show thatfirms originating in countries where political and legal institutionsare weak are more likely to choose either the main U.S. exchangesor Rule 144A as compared to over-the-counter programs. (C) 2014 Elsevier B. V. All rights reserved.