Cross Listing Waves and the Search for Value Gains

Abstract:     
In this study, we identify waves in cross listing activity at the host market, home market, and industry level and find them to be positively correlated with relative financial and economic market performance. We use these waves to increase the power of tests on the valuation gains to cross listing based on the assertion that periods of foreign listing intensity should be associated by revealed preference with periods of particular gains to listing. We find no evidence of durable valuation gains, even during the periods of most intense listing activity. The long-term abnormal valuation ratio of firms listing abroad is no greater than that of firms that do not cross list regardless of time period, host market, home market, or industry. We do find evidence of temporary gains, particularly during periods of high intensity in host market listing, suggesting that it is these short-term gains that motivate listing abroad.

Keywords: Firm valuation, Relative market development, Stock exchanges, Tobin's Q

JEL Classifications: G15, G32

Working Paper Series