Disclosure Requirements and Stock Exchange Listing Choice in an International Context

Journal of Accounting and Economics, Vol. 26, Nos. 1-3, 1998

Posted: 10 Feb 1999

See all articles by Steven J. Huddart

Steven J. Huddart

Pennsylvania State University, University Park - Department of Accounting

Markus K. Brunnermeier

Princeton University - Department of Economics

John S. Hughes

University of California at Los Angeles

Multiple version iconThere are 2 versions of this paper

Abstract

This paper analyzes whether competition between stock exchanges for volume leads to a deterioration of disclosure requirements imposed by those exchanges on listing firms. The model shows that trading concentrates on the high disclosure exchange, prompting exchanges to engage in a "race for the top" by requiring the highest level of disclosure for listed firms. Disclosure requirements affect the allocation of liquidity across exchanges and the listing decisions of firms controlled by corporate insiders. In effect, corporate insiders compete with each other for liquidity to their mutual disadvantage. Introducing risk aversion on the part of liquidity traders creates a diversification motive to allocate demands to a low disclosure exchange. Listing costs, taxes, and other restrictions may prompt some firms to list on the low disclosure exchange. Despite these additional features, each exchange maximizes trading volume by selecting the highest feasible standards.

Note: This is a description of the article and not the actual abstract.

JEL Classification: G15, M41, K22

Suggested Citation

Huddart, Steven J. and Brunnermeier, Markus Konrad and Hughes, John S., Disclosure Requirements and Stock Exchange Listing Choice in an International Context. Journal of Accounting and Economics, Vol. 26, Nos. 1-3, 1998, Available at SSRN: https://ssrn.com/abstract=146737

Steven J. Huddart (Contact Author)

Pennsylvania State University, University Park - Department of Accounting ( email )

University Park, PA 16802-3603
United States
814-863-0448 (Phone)

HOME PAGE: http://directory.smeal.psu.edu/sjh11

Markus Konrad Brunnermeier

Princeton University - Department of Economics ( email )

Bendheim Center for Finance
Princeton, NJ
United States
609-258-4050 (Phone)
609-258-0771 (Fax)

HOME PAGE: http://www.princeton.edu/¡­markus

John S. Hughes

University of California at Los Angeles ( email )

D410 Anderson Complex
Los Angeles, CA 90095-1481
United States
310-794-9553 (Phone)
310-267-2193 (Fax)

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