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245			_aWhat makes the bonding stick? A natural experiment testing the legal bonding hypothesis / by Amir N. Licht, Christopher Poliquin, Jordan I. Siegel & Xi Li _cAmir N. Licht, Christopher Poliquin, Jordan I. Siegel & Xi Li
260			_aAmsterdam _bElsevier _cAugust 2018
300			_aPages 329-356
440			_a Journal of Financial Economics _v129 (2) _x0304-405X
500			_aAbstract We use a US Supreme Court case, Morrison v. National Australia Bank (2010), as a natural experiment to test the legal bonding hypothesis. By decreasing the potential liability of US-listed foreign firms, particularly due to class action lawsuits, Morrison arguably eroded their legal bonding to compliance with disclosure duties. Nevertheless, we find evidence of an increase or insignificant change in share values. Tests of longer-run effects of the legal event indicate that foreign firms’ disclosure quality and likelihood of facing enforcement actions remained stable, as did investors’ revealed preferences for trading on US markets. These results go against the legal bonding hypothesis but are consistent with reputational bonding and with market-based accounts of US cross-listing. Our results may contribute to ongoing debate about civil enforcement of securities laws through class actions.
690			_aBonding
690			_aClass actions
690			_aCross-listing
690			_aCorporate governance
690			_aCivil liability
690			_aReputation
942			_2lcc _cSE
999			_c361365 _d361365