Firm Value and Cross-Listings: The Impact of Stock Market Prestige

47 Pages Posted: 28 Sep 2010

See all articles by Nicola Cetorelli

Nicola Cetorelli

Federal Reserve Bank of New York

Stavros Peristiani

Federal Reserve Bank of New York--Retired

Date Written: September 1, 2010

Abstract

This study investigates the valuation impact of a firm’s decision to cross-list on a more (or less) prestigious stock exchange relative to its own domestic market. We use network analysis to derive broad market-based measures of prestige for forty-five country or regional stock exchange destinations between 1990 and 2006. We find that firms cross-listing in a more prestigious market enjoy significant valuation gains over the five-year period following the listing. We also document a reverse effect for firms cross-listing in less prestigious markets: These firms experience a significant decline in valuation over the five years following the listing. The reputation of the cross-border listing destinations is therefore a useful signal of a firm’s value going forward. Our findings are consistent with the view that cross-listing in a prestigious market enhances a firm’s visibility, strengthens corporate governance, and lowers informational frictions and capital costs.

Keywords: Cross-Listings, Network Analysis

JEL Classification: G15, G20

Suggested Citation

Cetorelli, Nicola and Peristiani, Stavros, Firm Value and Cross-Listings: The Impact of Stock Market Prestige (September 1, 2010). FRB of New York Staff Report No. 474, Available at SSRN: https://ssrn.com/abstract=1684105 or http://dx.doi.org/10.2139/ssrn.1684105

Nicola Cetorelli (Contact Author)

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-5071 (Phone)
212-720-8363 (Fax)

HOME PAGE: http://nyfedeconomists.org/cetorelli/

Stavros Peristiani

Federal Reserve Bank of New York--Retired ( email )

3001 Henry Hudson Pkwy W
Apartment 1C
Bronx, NY New York 10463
United States
718-796-5190 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
189
Abstract Views
1,440
rank
174,617
PlumX Metrics