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

See all articles by Olga Dodd

Olga Dodd

Auckland University of Technology

Date Written: July 26, 2013

Abstract

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

Dodd, Olga, Why Do Firms Cross-List Their Shares on Foreign Exchanges? A Review of Cross-Listing Theories and Empirical Evidence (July 26, 2013). Review of Behavioral Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2271371

Olga Dodd (Contact Author)

Auckland University of Technology ( email )

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

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