A Breakdown of the Valuation Effects of International Cross-Listing

39 Pages Posted: 15 Mar 2006

See all articles by Arturo Bris

Arturo Bris

IMD International; European Corporate Governance Institute (ECGI); Yale University - International Center for Finance

Salvatore Cantale

Tulane University - A.B. Freeman School of Business

George Nishiotis

University of Cyprus-School of Economics and Management- Department of Accounting and Finance

Multiple version iconThere are 2 versions of this paper

Date Written: December 2005

Abstract

It is well known that cross-listing domestic stocks in foreign exchanges has significant valuation effects on the listed company's shares. Using a sample of firms with dual shares, we explore the differential effects of cross-listing on prices and we are able to separate the different sources of the benefits of cross-listing. Our results show that even though the market segmentation and bonding effects are both statistically significant, the economic significance of segmentation is more than double that of bonding. Furthermore, we document an economically and statistically significant increasse in the liquidity of both share classes after the listing. Overall, our results explain why less and less firms are willing to list in the U.S.: Sarbanes Oxley has increased the cost of adopting better governance while its benefits are not substantial; and market segmentation has decreased significantly in the last years.

Keywords: Corporate Governance, Finance, International Finance, Mergers

JEL Classification: G34, G15, F36

Suggested Citation

Bris, Arturo and Cantale, Salvatore and Nishiotis, George P., A Breakdown of the Valuation Effects of International Cross-Listing (December 2005). Yale ICF Working Paper No. 05-30; ECGI - Finance Working Paper No. 106/2005; EFA 2006 Zurich Meetings Paper. Available at SSRN: https://ssrn.com/abstract=868485 or http://dx.doi.org/10.2139/ssrn.868485

Arturo Bris (Contact Author)

IMD International ( email )

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

European Corporate Governance Institute (ECGI)

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

HOME PAGE: http://www.ecgi.org

Yale University - International Center for Finance ( email )

Box 208200
New Haven, CT 06520
United States

Salvatore Cantale

Tulane University - A.B. Freeman School of Business ( email )

7 McAlister Drive
New Orleans, LA 70118
United States
504-865-5032 (Phone)
504-865-6751 (Fax)

George P. Nishiotis

University of Cyprus-School of Economics and Management- Department of Accounting and Finance ( email )

1 University Avenue
P.O. Box 20537
Nicosia CY-1678
Cyprus
357 22893617 (Phone)
357 22895475 (Fax)

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