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The Overseas Listing Decision: New Evidence of Proximity Preference

Review of Financial Studies, 2004, 17(3), 769-809

Darden Business School Working Paper No. 03-07

57 Pages Posted: 29 May 2003 Last revised: 13 Nov 2012

Sergei Sarkissian

McGill University; Yerevan State University

Michael J. Schill

University of Virginia ­ Darden School of Business

Date Written: March 22, 2004

Abstract

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

Sarkissian, Sergei and Schill, Michael J., The Overseas Listing Decision: New Evidence of Proximity Preference (March 22, 2004). Review of Financial Studies, 2004, 17(3), 769-809; Darden Business School Working Paper No. 03-07. Available at SSRN: https://ssrn.com/abstract=267103 or http://dx.doi.org/10.2139/ssrn.267103

Sergei Sarkissian (Contact Author)

McGill University ( email )

1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
Canada
514-398-4876 (Phone)
514-398-3876 (Fax)

Yerevan State University

1 Alex Manoogian Street
Yerevan, 0025
Armenia

Michael J. Schill

University of Virginia ­ Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4071 (Phone)
434-243-7676 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/schill.htm

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