The Diminishing Benefits of U.S. Cross-Listing: Economic Consequences of SEC Rule 12h-6
76 Pages Posted: 23 Mar 2016
Date Written: February 1, 2016
On March 21, 2007, SEC passed Rule 12h-6 to make it easier for cross-listed firms to deregister from the U.S. market and escape its regulatory costs. Using difference-in-difference tests, we find that, on average, Rule 12h-6’s passage induced an increase in voting premium, a decline in equity raising, and a decline in cross-listing premium. These effects are observed for exchange-listed firms, and for firms from countries with weak investor protection. We conclude that while cross-listed firms are still valued at a significant premium over non-cross-listed firms, the rule decreased the value of commitment to the U.S. regulatory system.
Keywords: cross listing; deregulation
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