An Examination of the Comparative Valuation Effects of Enhanced Disclosure and Cross-Listing in the US

32 Pages Posted: 6 Mar 2007 Last revised: 17 Jul 2012

See all articles by Irene Karamanou

Irene Karamanou

University of Cyprus - Department of Public and Business Administration

George Nishiotis

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

Date Written: July 15, 2012

Abstract

Using a large sample of international firms we investigate the corporate decisions to voluntarily adopt International Accounting Standards (IAS/IFRS), and to cross-list in the US. We jointly examine these globalization decisions by employing a multinomial logistic model, and use this framework to correct for selection bias in our valuation analysis. We find no significant differences between our documented valuation premia of IFRS and US exchange listed firms. This indicates that cross-listing valuation benefits stem mainly from disclosure enhancement than from the stricter US legal system and that voluntary disclosure can be beneficial even in the absence of a strong legal environment. Furthermore, we find strong evidence that firms from countries with weak investor protection and firms less integrated with the world market benefit more from IFRS adoption. In contrast, we find no evidence that cross-listing on a US exchange is valued more for firms with weaker home country investor protection.

Keywords: Disclosure, IFRS, Cross-Listing, Bonding, Corporate Governance

JEL Classification: G15, G38, G34

Suggested Citation

Karamanou, Irene and Nishiotis, George P., An Examination of the Comparative Valuation Effects of Enhanced Disclosure and Cross-Listing in the US (July 15, 2012). Available at SSRN: https://ssrn.com/abstract=968230 or http://dx.doi.org/10.2139/ssrn.968230

Irene Karamanou

University of Cyprus - Department of Public and Business Administration ( email )

75 Kallipoleos Street
P.O. Box 20537
Nicosia CY-1678
CYPRUS
+357 2 892471 (Phone)
+357 2 892460 (Fax)

George P. Nishiotis (Contact Author)

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

Cyprus

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