Valuation of Canadian- vs. U.S.-Listed Equity: Is There a Discount?

Bank of Canada Working Paper No. 2003-6

37 Pages Posted: 5 Aug 2003

See all articles by Michael R. King

Michael R. King

Gustavson School Of Business

Dan Segal

Interdisciplinary Center (IDC) Herzliyah

Date Written: March 2003


The authors examine how the valuation multiples assigned to the equity of Canadian-listed firms compare with the equity of comparable firms listed in the United States. They find that Canadian-listed firms trade at a discount to U.S.-listed firms across a range of valuation measures. Differences in accounting do not explain this discount, based on a comparison of Canadian interlisted firms that report under both Canadian and U.S. generally accepted accounting principles. This discount exists despite Canadian-listed firms having a lower cost of equity and higher profitability than comparable U.S.-listed firms. Consistent with theory, part of the differences in valuation are explained by company-specific factors, such as industry, firm size, cost of equity, or profitability. The authors also find that characteristics of the stock market where the share is listed affect valuation, such as secondary market liquidity and the relative performance of the overall equity market. They find that a country discount persists after controlling for these company-specific and market-specific factors, which suggests that Canadian and U.S. financial markets remain segmented.

Keywords: Equity, valuation, country factors, segmentation, accounting

JEL Classification: G12, G15, M41, M47

Suggested Citation

King, Michael Robert and Segal, Dan, Valuation of Canadian- vs. U.S.-Listed Equity: Is There a Discount? (March 2003). Bank of Canada Working Paper No. 2003-6, Available at SSRN: or

Michael Robert King (Contact Author)

Gustavson School Of Business ( email )

University of Victoria
Business & Economics Building, Room 246
Victoria, British Columbia V8W 2Y2
250-721-6425 (Phone)

HOME PAGE: http://

Dan Segal

Interdisciplinary Center (IDC) Herzliyah ( email )

P.O. Box 167
Herzliya, 46150

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics