We examine how organizational learning and organizational disruption jointly arise when Chinese audit firms have U.S. cross-listed clients and which effect dominates. Among public companies listed only in China, we define the treatment group as companies audited by Chinese audit firms serving at least one U.S. client, similar companies audited by firms without U.S. clients as the control group. Survey evidence indicates strong incentives and opportunities to learn from U.S. engagements and frequent learning activities in treatment audit firms. The archival evidence however shows that their domestic audit quality declines relative to the control group. The effect is more pronounced when U.S. clients demand more audit resources, when domestic clients are more sensitive to limited audit attention, and when U.S. and domestic clients are more similar. Overall, our findings indicate a negative externality of U.S. cross-listing audit when resource constraints hinder an effective firm-wide learning.