Equity Cross-Listings in the U.S. and the Price of Debt

44 Pages Posted: 30 Jun 2009 Last revised: 18 Aug 2017

See all articles by Ryan T. Ball

Ryan T. Ball

The Stephen M. Ross School of Business at the University of Michigan

Luzi Hail

University of Pennsylvania - The Wharton School

Florin P. Vasvari

London Business School

Date Written: August 17, 2017

Abstract

Using a large panel from 46 countries over 20 years, we find that non-U.S. firms issue corporate bonds more frequently and at lower offering yields following an equity cross-listing on a U.S. exchange. Firms issue more bonds through public offerings instead of private placements and in foreign markets rather than at home, in both cases at significantly lower yields. Moreover, the debt-related benefits are concentrated among firms domiciled in countries with less private benefits of control, efficient debt enforcement, and developed bond markets, suggesting that equity cross-listings cannot completely offset the impact of weak home country institutions. The results support the notion that the monitoring, transparency, and visibility benefits brought about by equity cross-listings on U.S. exchanges are valuable to bond investors.

Keywords: Corporate governance, Bonding hypothesis, Debt financing, Disclosure, Law and finance, International accounting

JEL Classification: F34, G12, G15, G38, K22

Suggested Citation

Ball, Ryan T. and Hail, Luzi and Vasvari, Florin P., Equity Cross-Listings in the U.S. and the Price of Debt (August 17, 2017). ECGI - Finance Working Paper No. 274/2010; CELS 2009 4th Annual Conference on Empirical Legal Studies Paper. Available at SSRN: https://ssrn.com/abstract=1426586 or http://dx.doi.org/10.2139/ssrn.1426586

Ryan T. Ball

The Stephen M. Ross School of Business at the University of Michigan ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

Luzi Hail (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States
215-898-8205 (Phone)
215-573-2054 (Fax)

Florin P. Vasvari

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

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