Hostname: page-component-848d4c4894-wg55d Total loading time: 0 Render date: 2024-06-01T13:55:13.378Z Has data issue: false hasContentIssue false
  • English
  • Français

International Cross-Listing and Visibility

Published online by Cambridge University Press:  06 April 2009

H. Kent Baker ,
John R. Nofsinger  and
Daniel G. Weaver
H. Kent Baker
Affiliation:
kbaker@american.edu, American University, Kogod School of Business, Department of Finance and Real Estate, 4400 Massachusetts Avenue NW, Washington, DC 20016
John R. Nofsinger
Affiliation:
john.nofsinger@cbe.wsu.edu, Washington State University, College of Business and Economics, Department of Finance, Pullman, WA 99164
Daniel G. Weaver
Affiliation:
daniel_weaver@baruch.cuny.edu, Zicklin School of Business, Baruch College, Department of Economics and Finance, 17 Lexington Avenue, Box #20621, New York, NY 10012.
Get access Rights & Permissions [Opens in a new window]

Abstract

This study shows that international firms listing their shares on the New York Stock Exchange (NYSE) or the London Stock Exchange (LSE) experience a significant increase in visibility, as proxied by analyst coverage and print media attention (The Wall Street Journal or Financial Times). The increase in analyst following is also associated with a decrease in the cost of equity capital after the listing event in a way consistent with Merton's (1987) investor recognition hypothesis. Our results are stronger for NYSE listing firms than for LSE listing firms. This may partially compensate firms for the higher costs associated with NYSE listing (compared to LSE listing).

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 37 , Issue 3 , September 2002 , pp. 495 - 521
Copyright
Copyright © School of Business Administration, University of Washington 2002

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Alexander, G. J.; Eun, C. S.; and Janakiramanan, S.. “International Listings and Stock Returns: Some Empirical Evidence.” Journal of Financial and Quantitative Analysis, 23 (1988), 135–151.CrossRefGoogle Scholar
Amihud, Y., and Mendelson, H.. “Asset Prices and the Bid Ask Spread.” Journal of Financial Economics, 17 (1986), 223–249.CrossRefGoogle Scholar
Amihud, Y.; Mendelson, H.; and Uno, J.. “Number of Shareholders and Stock Prices: Evidence from Japan.” Journal of Finance, 54 (1999), 1169–1184.CrossRefGoogle Scholar
Bailey, W.; Chung, Y. P.; and Kang, J.. “Foreign Ownership Restrictions and Equity Price Premiums: What Drives the Demand for Cross-Border Investments?” Journal of Financial and Quantitative Analysis, 34 (1999), 489–511.CrossRefGoogle Scholar
Baker, H. K. “Why U.S. Companies List on the London, Frankfurt and Tokyo Stock Exchanges.” Journal of International Securities Markets, 6 (1992), 219–227.Google Scholar
Bhushan, R. “Firm Characteristics and Analyst Following.” Journal of Accounting and Economics, 11 (1989), 105–125.CrossRefGoogle Scholar
Brennan, M. J., and Subrahmanyam, A.. “Investment Analysis and Price Formation in Securities Markets.” Journal of Finance, 50 (1995), 361–381.Google Scholar
Bricker, R.; Grant, J.; Fogarty, T.; and Previts, G.. “Determinants of Analyst Following.” Journal of Corporate Communications, 1 (1999), 1–34.Google Scholar
Chaplinsky, S., and Ramchand, L.. “The Impact of Global Equity Offerings.” Journal of Finance, 55 (2000), 2767–2789.CrossRefGoogle Scholar
Coffee, J. “The Future as History: The Prospects for Global Convergence in Corporate Governance and Its Implications.” Working Paper, Columbia Univ. (1999).Google Scholar
Dharan, B. G., and Ikenberry, D. L.. “The Long-Run Negative Drift in Post-Listing Stock Returns.” Journal of Finance, 50 (1995), 1547–1574.Google Scholar
Domowitz, I.; Glen, J.; and Madhavan, A.. “International Cross Listing and Order Flow Migration: Evidence from an Emerging Market.” Journal of Finance, 53 (1998), 2001–2027.CrossRefGoogle Scholar
Errunza, V., and Miller, D. P.. “Market Segmentation and the Cost of Capital in International Equity Markets.” Journal of Financial and Quantitative Analysis, 35 (2000), 577–600.CrossRefGoogle Scholar
Euromoney, . “To List or Not to List.” Euromoney (1986), 43–45.Google Scholar
Fanto, J. A., and Karmel, R. S.. “Report on the Attitudes of Foreign Companies Regarding a U.S. Listing.” Stanford Journal of Law, Business and Finance, 51 (1997), 37–58.Google Scholar
Foerster, S. R., and Karolyi, G. A.. “International Listings of Stocks: The Case of Canada and the U.S.” Journal of International Business Studies, 24 (1993), 763–784.CrossRefGoogle Scholar
Foerster, S. R., and Karolyi, G. A.. “The Effects of Market Segmentation and Investor Recognition on Asset Prices: Evidence from Foreign Stocks Listing in the U.S.” Journal of Finance, 54 (1999), 981–1013.CrossRefGoogle Scholar
Foerster, S. R., and Karolyi, G. A.. “The Long-Run Performance of Global Equity Offerings.” Journal of Financial and Quantitative Analysis, 35 (2000), 499–528.CrossRefGoogle Scholar
Gadarowski, C. “Financial Press Coverage and Expected Stock Returns.” Working Paper, Cornell Univ. (2001).CrossRefGoogle Scholar
Henry, P. B. “Stock Market Liberalization, Economic Reform, and Emerging Market Equity Prices.” Journal of Finance, 55 (2000), 529–564.CrossRefGoogle Scholar
Juergens, J. L. “How Do Stock Markets Process Analysts' Recommendations.” Working Paper, Pennsylvania State Univ. (1999).CrossRefGoogle Scholar
Kadlec, G. B., and McConnell, J. J.. “The Effect of Market Segmentation and Liquidity on Asset Prices: Evidence from Exchange Listings.” Journal of Finance, 49 (1994), 611–636.CrossRefGoogle Scholar
Karolyi, G. A.Why Do Companies List Shares Abroad? A Survey of the Evidence and its Managerial Implications. New York, NY: New York Univ. Salomon Bros. Center Monograph, 7 (1998).Google Scholar
La Porta, R.; Lopez-de-Silanes, F.; Shleifer, A.; and Vishny, R. W.. “Law and Finance.” Journal of Political Economy, 106 (1998), 1113–1155.CrossRefGoogle Scholar
Lau, S.; Diltz, D.; and Apilado, V.. “Valuation Effects of International Stock Exchange Listings.” Journal of Banking and Finance, 18 (1994), 743–755.CrossRefGoogle Scholar
Marcus, B., and Wallace, S.. Competing in the New Capital Markets: Investor Relations Strategies for the 1990s. New York, NY: Harper Business (1991).Google Scholar
McConnell, J. J., and Sanger, G. C.. “The Puzzle in Post-Listing Common Stock Returns.” Journal of Finance, 42 (1987), 119–140.Google Scholar
McNichols, M., and O'Brien, P. C.. “Self-Selection and Analyst Coverage.” Journal of Accounting Research, 35 (1997), 167–199.CrossRefGoogle Scholar
Merton, R. C. “Presidential Address: A Simple Model of Capital Market Equilibrium with Incomplete Information.” Journal of Finance, 42 (1987), 483–510.CrossRefGoogle Scholar
Miller, D. P. “The Market Reaction to International Cross Listings: Evidence from Depositary Receipts.” Journal of Financial Economics, 51 (1999), 103–123.CrossRefGoogle Scholar
Mittoo, U. R. “Managerial Perceptions of the Net Benefits of Foreign Listing: Canadian Evidence.” Journal of International Financial Management and Accounting, 4 (1992), 40–62.CrossRefGoogle Scholar
Newey, W., and West, K.. “A Simple Positive Definite Heteroscedasticity and Autocorrelation Consistent Covariance Matrix.” Econometrica, 55 (1987), 703–708.CrossRefGoogle Scholar
O'Brien, P., and Bhushan, R.. “Analyst Following and Institutional Ownership.” Journal of Accounting Research, 28 (1990), 55–76.CrossRefGoogle Scholar
Pagano, M.; Röell, A. A.; and Zechner, J.. “The Geography of Equity Listing: Why Do Companies List Abroad?” Working Paper, Center for Economic Policy Research, London, UK (2001).Google Scholar
Reese, W. A. Jr, and Weisbach, M. S.. “Protection of Minority Shareholder Interests, Cross-Listings in the United States, and Subsequent Equity Offerings.” Journal of Financial Economics (forthcoming).Google Scholar
Sanger, G. C., and McConnell, J. J.. “Stock Exchange Listings, Firm Value, and Security Market Efficiency: The Impact of NASDAQ.” Journal of Financial and Quantitative Analysis, 2 (1986), 1–25.CrossRefGoogle Scholar
Smith, K., and Sofianos, G.. “The Impact of a NYSE Listing on the Global Trading of Non-U.S. Stocks.” NYSE Working Paper 97–02 (1997).Google Scholar
SRI International. Investor Information Needs and the Annual Report. Morristown, NJ: SRI International, Financial Executives Research Foundation (1987).Google Scholar
Stapleton, R. C., and Subrahmanyam, M. G.. “Market Imperfections, Capital Market Equilibrium and Corporate Finance.” Journal of Finance, 32 (1977), 307–319.CrossRefGoogle Scholar
Stulz, R. M. “On the Effects of Barriers to International Investment.” Journal of Finance, 36 (1981), 923–934.CrossRefGoogle Scholar
Stulz, R. M.. “Globalization, Corporate Finance, and the Cost of Capital.” Journal of Applied Corporate Finance, 12 (1999), 8–25.CrossRefGoogle Scholar
Trueman, B. “The Impact of Analyst following on Stock Prices and the Implications for Firms' Disclosure Policies.” Journal of Accounting, Auditing, and Finance, 11 (1996), 333–354.CrossRefGoogle Scholar
Walther, B. R. “Investor Sophistication and Market Earnings Expectations.” Journal of Accounting Research, 35 (1997), 157–179.CrossRefGoogle Scholar