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http://ssrn.com/abstract=1146605
 
 

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Why Do U.S. Cross-Listings Matter?


John Ammer


U.S. Federal Reserve Board of Governors

Sara B. Holland


University of Georgia - C. Herman and Mary Virginia Terry College of Business

David C. Smith


University of Virginia - McIntire School of Commerce

Francis E. Warnock


University of Virginia - Darden Business School; National Bureau of Economic Research (NBER)

May 2008

FRB International Finance Discussion Paper No. 930

Abstract:     
This paper investigates the underlying determinants of home bias using a comprehensive sample of U.S. investor holdings of foreign stocks. We document that U.S. cross-listings are economically important, as U.S. ownership in a foreign firm roughly doubles upon cross-listing in the United States. We explore the cross-sectional variation in this "cross-listing effect" and show that increases in U.S. investment are largest in firms from weak accounting backgrounds and in firms that are otherwise informationally opaque, indicating that U.S. investors value the improvements in disclosure associated with cross-listing. We confirm that relative equity valuations rise for cross-listed stocks, and provide evidence suggesting that valuation increases are due in part to increases in U.S. shareholder demand and in part to the fact that the equities become more attractive to non-U.S. shareholders.

Number of Pages in PDF File: 38

Keywords: Home bias, portfolio choice, financial disclosure, corporate governance

JEL Classification: G11, F21, C35

working papers series


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Date posted: June 16, 2008  

Suggested Citation

Ammer, John and Holland, Sara B. and Smith, David C. and Warnock, Francis E., Why Do U.S. Cross-Listings Matter? (May 2008). FRB International Finance Discussion Paper No. 930. Available at SSRN: http://ssrn.com/abstract=1146605 or http://dx.doi.org/10.2139/ssrn.1146605

Contact Information

John Matthew Ammer (Contact Author)
U.S. Federal Reserve Board of Governors ( email )
20th & C Streets NW
Washington, DC 20551
United States
202-452-2349 (Phone)
202-452-6424 (Fax)
Sara B. Holland
University of Georgia - C. Herman and Mary Virginia Terry College of Business ( email )
Brooks Hall
Athens, GA 30602-6254
United States
David Carl Smith
University of Virginia (UVA) - McIntire School of Commerce ( email )
P.O. Box 400173
Charlottesville, VA 22904-4173
United States
Francis E. Warnock
University of Virginia - Darden Business School ( email )
P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-6076 (Phone)
HOME PAGE: http://faculty.darden.virginia.edu/warnockf/index.htm
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138-5398
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