The purpose of the current study is to examine how and when home country identity salience of emerging market companies affects their overseas initial public offering (IPO) performance
By using secondary data from multiple sources, this study empirically tests the proposed research framework in the context of Chinese companies' overseas IPO activities in the US stock markets.
The results demonstrate that home country identity salience positively affects overseas IPO performance, and thus can be recognized as the asset of foreignness. Cultural specification positively moderates the effect of home country identity salience on overseas IPO performance. Market internationalization also plays an important moderating role in the relationship between home country identity salience and overseas IPO performance.
The current study identifies a new factor, that is, home country identity salience, that can mitigate the liability of foreignness for emerging market companies in their overseas IPO activities. The study also documents the positive cultural impacts on overseas investors in a financial and international context.
