International Cross-Listing and Shareholders’ Wealth

Multinational Finance Journal, 2012, Vol. 16, No. 1/2, pp. 49-86

29 Pages Posted: 3 Nov 2012 Last revised: 28 May 2013

See all articles by Olga Dodd

Olga Dodd

Auckland University of Technology

Christodoulos Louca

Cyprus University of Technology

Date Written: June 30, 2012

Abstract

This study evaluates the relationship between international cross-listings and shareholders’ wealth across different host markets and across time. For a sample of cross-listings by European companies in the US, in the UK, and within Europe, the findings show that US and UK cross-listings, on average, result in positive cumulative abnormal returns around the announcement of cross-listing. No such evidence exists for the rest of European cross-listings. In addition, the Sarbanes-Oxley Act (SOX) of 2002 affects negatively the wealth benefits of US cross-listings, while wealth creation around UK cross-listings is primarily concentrated in Alternative Investment Market listings rather than Main Market listings. There is no evidence that the introduction of the Euro affects the wealth effects of cross-listings within the Eurozone. Finally, this study provides evidence on the relative importance of alternative theories on the wealth effects of cross-listing, including market segmentation, legal bonding, liquidity, investor recognition, proximity preference, market timing and business strategy theories, after considering the effect of the introduction of the Euro and the adoption of SOX. The results show that significance of the alternative theories varies across host markets and over time.

Keywords: Cross-listing, shareholders’ wealth, Euro, AIM, the Sarbanes-Oxley Act

JEL Classification: G15, G14, G32

Suggested Citation

Dodd, Olga and Louca, Christodoulos, International Cross-Listing and Shareholders’ Wealth (June 30, 2012). Multinational Finance Journal, 2012, Vol. 16, No. 1/2, pp. 49-86. Available at SSRN: https://ssrn.com/abstract=2169675

Olga Dodd (Contact Author)

Auckland University of Technology ( email )

Auckland, 1142
New Zealand
+6499219999 ext 5423 (Phone)

Christodoulos Louca

Cyprus University of Technology ( email )

Limassol, 3603
Cyprus

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