Relative Industry Valuation and Cross-Border Listing

Using a sample of firms from 40 countries cross-listed in the U.S. during the 1982–2018 period, we find that the discrepancy between a firm’s home industry valuation and its corresponding U.S. industry valuation—the relative industry valuation—is an important factor in the listing decision and valuation after listing. International firms whose home market industries are undervalued relative to the corresponding U.S. industries are more likely to cross-list. They also enjoy permanent valuation gains after listing. These firms issue more equity, invest more, and realize higher growth rates.

Keywords: Cross-listing; Industry Segmentation; Relative Industry Valuation; Valuation Gains

JEL Classification: F30, G32, G15

Suggested Citation: Suggested Citation

Bae, Kee-Hong and Ding, Yi and Wang, Xiaoqiao, Relative Industry Valuation and Cross-Border Listing (July 15, 2020). Journal of Banking and Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3112222 or http://dx.doi.org/10.2139/ssrn.3112222