When Does Internationalization Enhance the Development of Domestic Stock Markets

Posted: 28 Aug 1998

See all articles by Kent W. Hargis

Kent W. Hargis

Goldman, Sachs and Co.

Pradipkumar Ramanlal

University of Central Florida - College of Business Administration

Abstract

We develop a model to examine the impact of international cross-listing on domestic market liquidity and trading volume to determine when domestic market development is likely to follow. Greater information transparency between markets increases domestic market liquidity and volume, resulting in market development. Conversely, post listing order flow migration away from the domestic market reduces its liquidity and volume, resulting in retardation. The net impact is positive and greater when market professionals acquire rather than reveal information, for smaller previously restricted markets, and for cross-listings in larger more transparent markets that have a greater potential to expand the shareholder base.

JEL Classification: D44, D82, F36, G15

Suggested Citation

Hargis, Kent and Ramanlal, Pradipkumar, When Does Internationalization Enhance the Development of Domestic Stock Markets. Journal of Financial Inermediation, Vol. 7, No. 3, Available at SSRN: https://ssrn.com/abstract=111297

Kent Hargis (Contact Author)

Goldman, Sachs and Co. ( email )

85 Broad Street
New York, NY 10004
United States
212 357-6363 (Phone)

Pradipkumar Ramanlal

University of Central Florida - College of Business Administration ( email )

PO Box 161400
Orlando, FL 32816
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
1,021
PlumX Metrics