Disclosure Requirements and Stock Exchange Listing Choice in an International Context

40 Pages Posted: 11 Nov 1997

See all articles by Steven J. Huddart

Steven J. Huddart

Pennsylvania State University, University Park - Department of Accounting

Markus K. Brunnermeier

Princeton University - Department of Economics

John S. Hughes

University of California at Los Angeles

Multiple version iconThere are 2 versions of this paper

Date Written: February 6, 1998

Abstract

We use a rational expectations model to examine how public disclosure requirements affect listing decisions by rent-seeking corporate insiders, and allocation decisions by liquidity traders seeking to minimize trading costs. We find that exchanges competing for trading volume engage in a "race for the top" where under disclosure requirements increase and trading costs fall. This result is robust to diversification incentives of risk-averse liquidity traders, institutional impediments that restrict the flow of liquidity, and listing costs. Under certain conditions, unrestricted liquidity flows to low disclosure exchanges. The consequences of cross-listing also are modeled.

JEL Classification: G15, M41, M45, K22

Suggested Citation

Huddart, Steven J. and Brunnermeier, Markus Konrad and Hughes, John S., Disclosure Requirements and Stock Exchange Listing Choice in an International Context (February 6, 1998). Available at SSRN: https://ssrn.com/abstract=40260 or http://dx.doi.org/10.2139/ssrn.40260

Steven J. Huddart (Contact Author)

Pennsylvania State University, University Park - Department of Accounting ( email )

University Park, PA 16802-3603
United States
814-863-0448 (Phone)

HOME PAGE: http://directory.smeal.psu.edu/sjh11

Markus Konrad Brunnermeier

Princeton University - Department of Economics ( email )

Bendheim Center for Finance
Princeton, NJ
United States
609-258-4050 (Phone)
609-258-0771 (Fax)

HOME PAGE: http://www.princeton.edu/¡­markus

John S. Hughes

University of California at Los Angeles ( email )

D410 Anderson Complex
Los Angeles, CA 90095-1481
United States
310-794-9553 (Phone)
310-267-2193 (Fax)

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