Legal Bonding, Investor Recognition, and Cross-Listing Premia in Emerging Markets

32 Pages Posted: 15 Jan 2012

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: January 15, 2012

Abstract

Using the IFC investable measure to designate firms as either investable or non-investable prior to cross-listing, I show that Level 2/3 cross-listing firms that were previously non-investable enjoy the largest “cross-listing premia.” Since previously non-investable firms are likely to experience the largest increase in their shareholder base post-listing, the results are consistent with the notion that enhanced “recognition” explains cross-listing premia. For these firms, a combination of bonding and greater recognition serves to deliver the largest cross-listing premia. For previously investable firms, bonding alone is sufficient to generate cross-listing premia.

Keywords: Cross-listing, investor recognition, legal bonding, emerging markets, Tobin’s q

JEL Classification: F30, G15, G32, K20

Suggested Citation

O'Connor, Thomas, Legal Bonding, Investor Recognition, and Cross-Listing Premia in Emerging Markets (January 15, 2012). Available at SSRN: https://ssrn.com/abstract=1985538 or http://dx.doi.org/10.2139/ssrn.1985538

Thomas O'Connor (Contact Author)

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

County Kildare
Ireland

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