Legal Bonding, Investor Recognition, and Cross-Listing Premia in Emerging Markets
32 Pages Posted: 15 Jan 2012
Date Written: January 15, 2012
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: Suggested Citation