Visibility Effects of Equity Cross-Listings
29 Pages Posted: 8 Jun 2013
Date Written: March 15, 2002
Abstract
This paper quantifies the visibility gained by companies cross-listing on foreign exchanges. Using an extensive data set on international equity cross-listings from 1986 to 1997 and analyst forecasts up to 1999, I analyze whether after cross-listings an increased number of brokerage firms follow a corporation's stock. I also explore changes in forecast precision and the degree of homogeneity within analyst forecasts subsequent to cross-listings. I find that cross-listing is generally a successful strategy if a firm wishes to increase visibility, as measrued by an increasing number of brokers following a firm and a higher total number of estimates. However, the higher number of analysts following a firm does not generally imply that the consensus forecast for firms with a cross-listing in the U.S. are significantly more precise than those for coparable firms without such a listing. This result could be due to the more stringent disclosure requirements in the U.S. compared to most European exchanges.
Keywords: Equity cross-listings, visibility, analyst forecasts
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