Companies domiciled in countries with weak investor protection can reduce agency costs between shareholders and management

Question

Quizplus · Accepted Answer

By listing their stocks in countries with strong investor protection, companies domiciled in countries with weak investor protection can enhance their credibility and attractiveness to foreign investors. It will also bring transparency to their operations and governance practices, which will ultimately reduce agency costs between shareholders and management. Moving to a better country or voluntarily complying with the provisions of the U.S. Sarbanes-Oxley Act could be costly and time-consuming, and having a press conference and promising to be nice to investors may not be enough to address the underlying issues.

Companies Domiciled in Countries with Weak Investor Protection Can Reduce