Why Do Firms Cross-List Their Shares on Foreign Exchanges? A Review of Cross-Listing Theories and Empirical Evidence
Review of Behavioral Finance, Forthcoming
31 Pages Posted: 29 May 2013 Last revised: 26 Jul 2013
Date Written: July 26, 2013
Financial markets’ integration and technological advances in equity trading may have reduced the potential benefits from listing a firm’s shares on a foreign exchange. Nevertheless, a significant number of firms continue to cross-list every year. This article examines the recent cross-listing trends and reviews the literature on motives to cross-list. The literature review includes a summary of theoretical studies grouped into cross-listing theories including market segmentation, liquidity, investor recognition, information disclosure, legal bonding, proximity preference and business strategy theories, and also includes a discussion of testable implications and empirical evidence for each of the above mentioned cross-listing theories.
Keywords: cross-listing, market segmentation, information motives, valuation effects, stock liquidity
JEL Classification: G32, G39, G15
Suggested Citation: Suggested Citation