Finance Market and Currency Union Integration in the Americas, with Regard to Foreign Corporate Activity on the American Stock Markets
81 Pages Posted: 3 Jun 2010
Date Written: June 3, 2010
The purpose of this study is to provide a contribution to the analysis of foreign cross-listing behaviour in general, and on the state of the integration of the American region's capital markets and economies in specific; while also examining the market preferences of U.S. firms in the Americas and around the world; as well as analysing the role of the growth and integration of the Mexican stock exchange into the American financial markets in regard to the 2008 credit crisis and in general. A logistic regression model based on Piotroski and Srinivasan's 2008 study is developed which takes into consideration exchange, firm, geographic, and industrial regressors in order to determine whether firms prefer listing on the New York Stock Exchange as compared to the Toronto Stock Exchange. Logistic regressions are also run on foreign corporations operating in Bermuda, Mexico and Brasil. Unit-root causality tests and ARCH regressions are run on the economy and stock exchange characteristics of the American economies to analyse currency union and finance market integration possibilities. The American economies are more integrated than their stock exchanges, though due to the fact that currency unions are much more political than stock market mergers, it is suggested that stock markets in the Americas will continue to integrate with a greater propensity than currency unions.
Keywords: Finance Markets, Integration, Americas, Stock Markets, Currency Unions, Foreign Corporations
JEL Classification: E20, F02
Suggested Citation: Suggested Citation