To What Extent do Cross-Listing Firms Integrate into the U.S. Environment?
60 Pages Posted: 5 Mar 2010 Last revised: 16 Mar 2012
Date Written: February 2012
We compare the value of firms that are cross-listed on U.S. exchanges to that of similar U.S. firms, and find a sizeable “cross-listing discount”. Over the period 1989-2006, cross-listed firms are valued 14% lower than U.S. firms. This valuation gap is strong, present across time and countries, is sustained over the cross-listing life-time. While the U.S. environment provides cross-listed firms with various benefits, their integration in the U.S. has limits. Examining the nature of these limits, we show that systematic differences in firm-level governance account for half of the discount. Furthermore, the cross-listing discount largely depends on whether cross-listed firms are familiar to U.S. investors.
Keywords: Cross-listing, Valuation, Familiarity, Home Bias, Corporate Governance, International Finance, Financial Integration
JEL Classification: G15, G34, G31
Suggested Citation: Suggested Citation