The Nature of the Foreign Listing Premium: A Cross-Country Examination

51 Pages Posted: 16 Jul 2010 Last revised: 4 Feb 2012

Sergei Sarkissian

McGill University; Yerevan State University

Michael J. Schill

University of Virginia ­ Darden School of Business

Date Written: January 29, 2012

Abstract

An expanding literature asserts that non-U.S. firms achieve a unique valuation premium for listing on U.S. equity markets. In this paper we test the uniqueness of the U.S. foreign listing premium by examining the premium achieved by foreign listings across a global set of stock exchanges. We highlight that the documented valuation premium for listing on U.S. exchanges is not unique but common to many home and host markets including U.S. firms that list abroad. The cross-sectional variation in the valuation premium appears to have little association with such cross-country institutional features as investor protection rules or accounting disclosure standards. Rather the premium appears most related to variation in pre-listing valuation ratios.

Keywords: Cross listings, Firm valuation, Rule of law, Stock exchanges, Tobin’s Q

JEL Classification: G15, G32

Suggested Citation

Sarkissian, Sergei and Schill, Michael J., The Nature of the Foreign Listing Premium: A Cross-Country Examination (January 29, 2012). Darden Business School Working Paper No. 1639848. Available at SSRN: https://ssrn.com/abstract=1639848 or http://dx.doi.org/10.2139/ssrn.1639848

Sergei Sarkissian (Contact Author)

McGill University ( email )

1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
Canada
514-398-4876 (Phone)
514-398-3876 (Fax)

Yerevan State University

1 Alex Manoogian Street
Yerevan, 0025
Armenia

Michael J. Schill

University of Virginia ­ Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4071 (Phone)
434-243-7676 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/schill.htm

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