Do Cross-Listings Drive Regulatory Convergence? Evidence from Germany
15 Pages Posted: 18 May 2006
Date Written: March 10, 2006
We analyse the cross listing behavior of German firms on the world's major stock exchanges. We find that only a very small minority of firms with capital market orientation cross list. The U.S. and Switzerland are the most popular locations. Taking into account the type of listing in the U.S., we find no evidence for traditional economic motives of cross listings: Firms do not position themselves to raise funds, to lower their cost of capital by shareholder diversification or to reduce agency costs by opting into a more stringent regulation. The economic motives for convergence of stock market regulation seem thin. Cross listing behavior is therefore unlikely to have an impact on the future shape of the stock exchanges.
Keywords: cross listing, stock exchange regulation, bonding hypothesis
JEL Classification: F36, G15
Suggested Citation: Suggested Citation