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http://ssrn.com/abstract=1047261
 
 

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The Market Reaction to Cross-Listings: Does the Destination Market Matter?


Peter Roosenboom


Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM)

Mathijs A. Van Dijk


Erasmus University - Rotterdam School of Management; Erasmus Research Institute of Management (ERIM)

April 14, 2009

Journal of Banking and Finance, Vol. 33, pp. 1898-1908, 2009

Abstract:     
This paper examines (i) whether market reactions to cross-listings differ across destination markets and (ii) to what extent the following explanations for value creation around cross-listings can account for differences in market reactions across cross-listings on various destination markets: overcoming market segmentation, increased market liquidity, improved information disclosure, and better investor protection (“bonding”). We analyze 526 cross-listings from 44 different countries on 8 major stock exchanges and document significant announcement returns of 1.3% on average for cross-listings on U.S. exchanges, 1.1% on London Stock Exchange, 0.6% on exchanges in continental Europe, and 0.5% (not significant) on Tokyo Stock Exchange. We find evidence consistent with improved disclosure and bonding creating value for cross-listings on U.S. exchanges, while overcoming segmentation and bonding are associated with higher announcement returns on the London Stock Exchange. The evidence is mixed for continental European exchanges and for Tokyo. Our results highlight the role of the destination market in value creation around cross-listings.

Number of Pages in PDF File: 31

Keywords: Cross-listings, Capital market integration, Investor protection, Market liquidity, Information disclosure

JEL Classification: F30, G14, G15

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Date posted: December 3, 2007 ; Last revised: May 1, 2010

Suggested Citation

Roosenboom, Peter and Van Dijk, Mathijs A., The Market Reaction to Cross-Listings: Does the Destination Market Matter? (April 14, 2009). Journal of Banking and Finance, Vol. 33, pp. 1898-1908, 2009. Available at SSRN: http://ssrn.com/abstract=1047261

Contact Information

Peter Roosenboom
Rotterdam School of Management, Erasmus University ( email )
P.O. Box 1738
Room T09-56
3000 DR Rotterdam
Netherlands
+31 10 40 82255 (Phone)
Erasmus Research Institute of Management (ERIM) ( email )
P.O. Box 1738
3000 DR Rotterdam
Netherlands
Mathijs A. Van Dijk (Contact Author)
Erasmus University - Rotterdam School of Management ( email )
P.O. Box 1738
Rotterdam, 3000 DR
Netherlands
+31 10 408 1124 (Phone)
+31 10 408 9017 (Fax)
HOME PAGE: http://mathijsavandijk.com/
Erasmus Research Institute of Management (ERIM)
P.O. Box 1738
3000 DR Rotterdam
Netherlands
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