Liability of Foreignness in Global Stock Markets: Liquidity Dynamics of Foreign IPOs in the US

40 Pages Posted: 19 Sep 2017 Last revised: 3 Jun 2019

See all articles by Chiara Banti

Chiara Banti

University of Essex

Gary C. Biddle

University of Melbourne - Faculty of Business and Economics; Columbia University - Columbia Business School; London Business School; The University of Hong Kong; University of Melbourne

Igor Filatotchev

City University London - Sir John Cass Business School

Jonathan Jona

Tulane University, A.B. Freeman School of Business, Finance & Economics, Students

Date Written: May 25, 2019

Abstract

Using a unique dataset of foreign and domestic IPOs listings in the US from 1990 to 2012, we study how foreignness affects IPO liquidity. We find that foreign IPOs enjoy higher liquidity than IPOs in their home countries, but do not fully gain the same liquidity benefits as for IPOs of domestic US issuers. In contrast to prior evidence for mature cross-listed firms, we show that liquidity differentials between foreign and domestic IPOs in the US are determined by information asymmetry related to foreignness rather than to home-country institutional environment characteristics. Thus, our results extend prior findings to reveal salient differences in liquidity and liquidity determinants between IPOs offerings by foreign and domestic firms in the US.

Keywords: Foreign Listings, Initial Public Offerings, Liquidity, Liability of Foreignness

JEL Classification: G01, M4, M49

Suggested Citation

Banti, Chiara and Biddle, Gary C. and Filatotchev, Igor and Jona, Jonathan, Liability of Foreignness in Global Stock Markets: Liquidity Dynamics of Foreign IPOs in the US (May 25, 2019). Available at SSRN: https://ssrn.com/abstract=3037214 or http://dx.doi.org/10.2139/ssrn.3037214

Chiara Banti

University of Essex ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Gary C. Biddle

University of Melbourne - Faculty of Business and Economics ( email )

Level 8, 198 Berkeley Street
Carlton, VIC 3010
Melbourne, Victoria 3010
Australia
61-3-8344-9807 (Phone)
61-3-9349-2397 (Fax)

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

The University of Hong Kong ( email )

00000
Hong Kong

University of Melbourne ( email )

Victoria
Melbourne, Victoria 3010 3010
Australia
383449807 (Phone)

HOME PAGE: http://https://findanexpert.unimelb.edu.au/display/person774767

Igor Filatotchev

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Jonathan Jona (Contact Author)

Tulane University, A.B. Freeman School of Business, Finance & Economics, Students ( email )

7 McAlister Drive
New Orleans, LA
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
112
Abstract Views
542
rank
253,949
PlumX Metrics