Is There a Cross Listing Premium for Non-Exchange Traded Depositary Receipts?

International Research Journal of Finance and Economics, No. 25, pp. 183-202, 2009

20 Pages Posted: 12 Jan 2010

See all articles by Thomas O’Connor

Thomas O’Connor

National University of Ireland, Maynooth (NUI Maynooth) - Department of Economics, Finance and Accounting

Date Written: 2009

Abstract

In this paper, I examine the valuation effects of trading in the U.S. as non-exchange issues i.e. Level 1 and 144 firms for non-U.S. firms. The study is motivated by two facts; first, while the number of new Level 2/3 issues has fallen 2001, Level 1 issues have remained an attractive listing option for non-U.S. firms. Second, while on theoretical grounds, firms from low-disclosure regimes have most to gain from exchange listing; these firms tend to list in the U.S. as non-exchange issues. Here, I examine whether the continuing attractiveness of, and the tendency of firms to choose a Level 1/144a listing is value enhancing. My results suggest that the tendency on the part of firms from low-disclosure regimes to choose non-exchange issues is justified. Relative to their high-disclosure peers, these firms tend to gain most from trading in the U.S. However, for Rule 144a issues, the valuation gains are short-lived.

Keywords: Cross listing, Level 1, Rule 144a, Tobin’s q

JEL Classification: G15, G34, G35

Suggested Citation

O'Connor, Thomas, Is There a Cross Listing Premium for Non-Exchange Traded Depositary Receipts? (2009). International Research Journal of Finance and Economics, No. 25, pp. 183-202, 2009, Available at SSRN: https://ssrn.com/abstract=1535469

Thomas O'Connor (Contact Author)

National University of Ireland, Maynooth (NUI Maynooth) - Department of Economics, Finance and Accounting ( email )

County Kildare
Ireland

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
60
Abstract Views
480
rank
388,024
PlumX Metrics