ADRs, Analysts, and Accuracy: Does Cross Listing in the U.S. Improve a Firm's Information Environment and Increase Market Value?
Mark H. Lang
University of North Carolina at Chapel Hill
Karl V. Lins
University of Utah - Department of Finance
Darius P. Miller
Southern Methodist University (SMU) - Edwin L. Cox School of Business
This paper investigates the relation between cross listing in the U.S., with its resulting commitment to increased disclosure, and the information environment of non-U.S. firms. We find that firms that cross-list on U.S. exchanges have greater analyst coverage and increased forecast accuracy relative to firms that are not cross listed. A time-series analysis shows that the change in analyst coverage and forecast accuracy occurs around cross listing. We also document that firms that have more analyst coverage and higher forecast accuracy have a higher valuation. Further, the change in firm value around cross listing is correlated with changes in the firm's information environment. Our findings support the hypothesis that cross-listed firms have better information environments, which are associated with higher market valuations.
Number of Pages in PDF File: 39
Keywords: ADRs, analysts, accuracy, cross listing
JEL Classification: G15, G29, G32, M41
Date posted: March 26, 2002