Does International Cross-Listing Improve the Information Environment?
Nuno Goncalves Gracias Fernandes
Miguel A. Ferreira
Nova School of Business and Economics; European Corporate Governance Institute (ECGI)
EFA 2005 Moscow Meetings
We investigate whether cross-listing in the U.S. affects the information environment for non-U.S. stocks. Our findings suggest cross-listing has an asymmetric impact on stock price informativeness around the world, as measured by firm-specific stock return variation. Cross-listing improves price informativeness for developed market firms. For firms in emerging markets, however, cross-listing decreases price informativeness. We also find that price informativeness increases the most for firms in countries with the greatest investor protection. The added analyst coverage associated with cross-listing likely explains the findings in emerging markets, rather than changes in liquidity, ownership, or accounting quality. Our results indicate that the added analyst coverage fosters the production of marketwide information, rather than firm-specific information.
Number of Pages in PDF File: 53
Keywords: Cross-listing, Firm-specific stock return variation, Emerging markets, Analyst coverage
JEL Classification: F3, G1, O4working papers series
Date posted: March 5, 2005
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