The Overseas Listing Decision: New Evidence of Proximity Preference
Review of Financial Studies, 2004, 17(3), 769-809
57 Pages Posted: 29 May 2003 Last revised: 13 Nov 2012
Date Written: March 22, 2004
Using a cross-section of effectively the entire universe of overseas listings across world markets, we examine the market preferences of firms listing their stock abroad. We find that geographic, economic, cultural, and industrial proximity plays the dominant role in the choice of overseas listing venue. Contrary to the notion that firms maximize international portfolio diversification gains in listing abroad, cross-listing activity is more common across markets for which diversification gains are relatively low. Our findings imply that the same proximity constraints that are believed to lead to "home bias" in investment portfolio decisions also exert a profound influence on financing decisions.
Keywords: Cross-listings, Familiarity Bias, Diversification
JEL Classification: G15, G32
Suggested Citation: Suggested Citation