Does Cross-Listing Signal Quality?

Journal of Contemporary Accounting and Economics, Forthcoming

Posted: 19 Nov 2006

See all articles by Robert B. B. Durand

Robert B. B. Durand

Curtin University of Technology - School of Economics and Finance - Department of Finance and Banking

Felix Gunawan

The University of Western Australia

Ann Tarca

University of Western Australia

Abstract

The literature on cross-listing generally conveys the impression that cross-listing is good news about a firm. This paper focuses on returns following cross-listing where evidence of positive results from cross-listing is mixed. Considering 81 Australian firms, we find that cross-listed firms are less profitable with higher debt levels prior to cross-listing and that they achieve significant negative abnormal returns in the three years following cross-listing. This result holds even for firms seeking the benefits of "bonding" to US disclosure requirements by cross-listing in the more regulated US markets. Our study suggests cross-listing is not an unambiguous positive signal about a firm.

Keywords: cross-listing, long-run abnormal returns

JEL Classification: G39, G15, M41, M45

Suggested Citation

Durand, Robert B. B. and Gunawan, Felix and Tarca, Ann, Does Cross-Listing Signal Quality?. Journal of Contemporary Accounting and Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=945039

Robert B. B. Durand

Curtin University of Technology - School of Economics and Finance - Department of Finance and Banking ( email )

Bentley 6102 WA
Australia

HOME PAGE: http://tiny.cc/y85rh

Felix Gunawan

The University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
AUSTRALIA

Ann Tarca (Contact Author)

University of Western Australia ( email )

Business School
35 Stirling Highway
Crawley WA 6009
Australia
+61 8 6488 3868 (Phone)
+61 8 6488 1047 (Fax)

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