Does International Cross-Listing Improve the Information Environment?

53 Pages Posted: 5 Mar 2005

See all articles by Nuno Fernandes

Nuno Fernandes

Catolica Lisbon School of Business and Economics; IMD International

Miguel A. Ferreira

Nova School of Business and Economics; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: June 2007

Abstract

We investigate whether cross-listing in the U.S. affects the information environment for non-U.S. stocks. Our findings suggest cross-listing has an asymmetric impact on stock price informativeness around the world, as measured by firm-specific stock return variation. Cross-listing improves price informativeness for developed market firms. For firms in emerging markets, however, cross-listing decreases price informativeness. We also find that price informativeness increases the most for firms in countries with the greatest investor protection. The added analyst coverage associated with cross-listing likely explains the findings in emerging markets, rather than changes in liquidity, ownership, or accounting quality. Our results indicate that the added analyst coverage fosters the production of marketwide information, rather than firm-specific information.

Keywords: Cross-listing, Firm-specific stock return variation, Emerging markets, Analyst coverage

JEL Classification: F3, G1, O4

Suggested Citation

Fernandes, Nuno and Ferreira, Miguel Almeida, Does International Cross-Listing Improve the Information Environment? (June 2007). EFA 2005 Moscow Meetings. Available at SSRN: https://ssrn.com/abstract=676653 or http://dx.doi.org/10.2139/ssrn.676653

Nuno Fernandes

Catolica Lisbon School of Business and Economics ( email )

Palma de Cima
Lisbon, 1649-023
Portugal

IMD International ( email )

Ch. de Bellerive 23
P.O. Box 915
CH-1001 Lausanne
Switzerland

Miguel Almeida Ferreira (Contact Author)

Nova School of Business and Economics ( email )

Campus de Campolide
Lisbon, 1099-032
Portugal

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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