The Overseas Listing Decision: New Evidence of Proximity Preference
McGill University; Yerevan State University
Michael J. Schill
University of Virginia – Darden Graduate School of Business Administration
March 22, 2004
Review of Financial Studies, 2004, 17(3), 769-809
Darden Business School Working Paper No. 03-07
Using a cross-section of effectively the entire universe of overseas listings across world markets, we examine the market preferences of firms listing their stock abroad. We find that geographic, economic, cultural, and industrial proximity plays the dominant role in the choice of overseas listing venue. Contrary to the notion that firms maximize international portfolio diversification gains in listing abroad, cross-listing activity is more common across markets for which diversification gains are relatively low. Our findings imply that the same proximity constraints that are believed to lead to "home bias" in investment portfolio decisions also exert a profound influence on financing decisions.
Number of Pages in PDF File: 57
Keywords: Cross-listings, Familiarity Bias, Diversification
JEL Classification: G15, G32
Date posted: May 29, 2003 ; Last revised: November 13, 2012
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