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Cross Listing And Firm Growth
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Book Synopsis Cross-Listing and Firm Growth by : Inder K. Khurana
Download or read book Cross-Listing and Firm Growth written by Inder K. Khurana and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Extant research posits that cross-listing improves firms' access to lower cost external financing. But so far, there is scarce evidence that improved access to external funds through cross-listing contributes to higher firm growth. Documenting the relation between firm growth and cross-listing is critical because the presumption in prior research is that funds raised via cross-listing will be channeled towards potentially profitable projects. Using a sample of firms from thirty-seven countries that are cross-listed in the USA, we find a positive association between cross-listing and subsequent externally financed firm growth rates. However, we do not find that increases in externally financed firm growth after cross-listing vary systematically as a function of the home-country attributes of the cross-listed firms. Overall, our results provide new and direct evidence on the impact of cross-listing on the firm growth rates.
Book Synopsis Does Cross Listing Lead to Higher Firm Growth by : Inder K. Khurana
Download or read book Does Cross Listing Lead to Higher Firm Growth written by Inder K. Khurana and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Extant research posits that cross-listing improves firms' access to lower cost external financing. But so far, there is scarce evidence that improved access to external funds through cross-listing contributes to higher firm growth. Documenting the relation between firm growth and cross-listing is critical because the presumption in prior research is that funds raised via cross-listing will be channeled towards potentially profitable projects. Using a sample of firms from 37 countries that are cross-listed in the U.S., we find a positive association between cross-listing and subsequent externally-financed firm growth rates. However, we do not find that increases in externally-financed firm growth after cross-listing vary systematically as a function of the home-country attributes of the cross-listed firms. Overall, our results provide new and direct evidence on the impact of cross-listing on firm growth rates.
Book Synopsis Cross Listing and Firm Value - Corporate Governance or Market Segmentation? An Empirical Study of the Stock Market by : Andy G. Ji
Download or read book Cross Listing and Firm Value - Corporate Governance or Market Segmentation? An Empirical Study of the Stock Market written by Andy G. Ji and published by . This book was released on 2007 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the economic consequences of cross-listing on the Chinese stock market. We argue that by adopting a higher disclosure standard through cross-listing firms voluntarily commit themselves to reducing information asymmetry. As a result, cross-listed firms are able to benefit from growth opportunities with less appropriated cash flow and lower cost of capital. The empirical evidence shows that cross-listed firms indeed command higher valuations than their non-cross-listed counterparts, after controlling for certain firm-specific attributes. This lends support to the corporate governance hypothesis of cross-listing on the Chinese stock market. The study also argues that an overall upgrading of accounting standards cannot substitute for the cross-listing mechanism.
Book Synopsis Stock Price Informativeness, Cross-Listings and Investment Decisions by : Thierry Foucault
Download or read book Stock Price Informativeness, Cross-Listings and Investment Decisions written by Thierry Foucault and published by . This book was released on 2013 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: We show that a cross-listing allows a firm to make better investment decisions because it enhances stock price informativeness. This theory of cross-listings yield several predictions. In particular, it implies that the sensitivity of investment to stock prices should be larger for cross-listed firms. Moreover, the increase in value generated by a cross-listing (the cross-listing premium) should be positively related to the size of growth opportunities and negatively related to the quality of managerial information. We also analyze in details the effects of the geography of ownership (the distribution of holdings between foreign and domestic investors) on the cross-listing premium. In particular, we show that the sensitivity of the cross-listing premium to the size of growth opportunities increases when holdings (resp. market shares) become more evenly distributed between foreign and domestic investors (resp. markets). Last, we show that concentration of trading in the home market (flow-back) can indeed increase the cross-listing premium for some firms.
Book Synopsis Discussion of the empirical evidence regarding the merit of companies cross-listing their shares on foreign equity markets by : Matthias Hilgert
Download or read book Discussion of the empirical evidence regarding the merit of companies cross-listing their shares on foreign equity markets written by Matthias Hilgert and published by GRIN Verlag. This book was released on 2005-05-02 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: Essay from the year 2005 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: very good (UK: grade A), University of Glasgow (Department of Accounting and Finance), course: International Financial Management, language: English, abstract: Some non-American companies benefit from a US-listing and others do not even cross-list in the US. Several empirical studies show that foreign companies, which are listed in the US, are worth more. However, less than one out of 10 large public non-American companies float their shares in the US (Doidge et al., 2004). Why is cross-listing beneficial to some companies and not to others? In 1997 more than 4,700 companies were internationally cross-listed. But, during the past several years this number decreased significantly by 50% to 2,300 (end of 2002) companies (Karolyi, 2004). Today more and more foreign companies acknowledge that they cannot cross-list in the US. Moreover, some companies admit that they are no longer even willing to cross-list, because of the high costs and strict requirements (Economist, 2005). Still, there must be a benefit for some to cross-list. A number of studies point out that the benefits regarding cross-listing include a lower cost of capital, access to foreign capital markets, an extended global shareholder base, greater liquidity in the trading of shares, publicity, visibility and prestige. On the other hand, these companies face costs, which might erode the benefits. Typical costs associated with a US-listing are the SECreporting, reconciliation of financial statements with home and foreign standards, direct listing costs, compliance requirements, exposure to legal liabilities, taxes and various trading frictions as well as investment banking fees (Karolyi, 2004 and Doidge et al., 2004). This essay aims to examine the empirical evidence regarding the merit of cross-listing shares on foreign equity markets, especially listing shares in the US. First, it critically reviews the conventional wisdom. Secondly, it examines the new approach of the cross-listing premium. Finally, it ends with a summary of this project and my own opinions.
Book Synopsis The Effects of International Cross-Listing on Rival Firms by : Michael Melvin
Download or read book The Effects of International Cross-Listing on Rival Firms written by Michael Melvin and published by . This book was released on 2003 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: The analysis focuses on the stock price impact of firms' U.S. cross-listing on home-market rival firms. A theoretical model is presented that indicates the effect is ambiguous, and that it depends on whether there is a decrease in the cost of capital for rival firms and on the improved growth opportunities of the listing firm that make rivals have relatively lower growth prospects. The empirical work uses both listing dates and announcement dates of forthcoming ADR programs. An event study approach is employed to analyze the impact on the home market price of the rival firm around the dates of listing and announcement of listing. We find negative cumulative average abnormal returns for the rival firms around the announcement and listing dates, consistent with rival firms being hurt by the listing. The evidence suggests that investors see rivals as less transparent, less informative, and with poorer growth prospects relative to the listing firm. We also find evidence that the effect on the rival firm is stronger for firms from emerging market countries than for firms from developed market countries.
Book Synopsis Effects of Cross-listing on Valuation and Firm Performance [MBA Thesis a Ccompanied by a CD-ROM] by :
Download or read book Effects of Cross-listing on Valuation and Firm Performance [MBA Thesis a Ccompanied by a CD-ROM] written by and published by . This book was released on 2014 with total page 79 pages. Available in PDF, EPUB and Kindle. Book excerpt: The main objective of this study was to examine the effects of regional cross-listing on firm value and performance on Kenyan firms. The specific research objectives for this study were: (i) to determine the effect of cross-listing on valuation; (ii) to determine the effect of cross-listing on profitability and growth; (iii) to determine the effect of cross-listing on liquidity and leverage and; (iv) to determine the effect of cross-listing on operational performance. The scope of the study focused on 5 cross-listed firms whose primary listing is the NSE. Thus, conducting a census the study analyzed data from firms? financial statements and the NSE daily market averages and analyzed the firms? value, profitability and growth, liquidity and leverage and, operational performance to examine the differences prior and subsequent to listing. The study conducted a time series analysis, taking into consideration the independence of the variables are concerned with a time series data set, thus sought to examine the evolution of the variables over time using data spanning seven years i.e. three years before cross-listing, the year of cross-listing and three years after cross-listing. The study further subjected the results to a univariate analysis in order to examine the significance of the findings using the paired t-test for the firms Tobin?s Q, liquidity and leverage, profitability and growth and operational performance. Additionally, the findings were also subjected to a correlation analysis to measure the degree of relationship between the variables under study. The results on firm value show that on average the firm value decreased after cross-listing but the results had no statistically significant difference from before and after cross-listing. Tobin?s Q and profitability had a strong correlation indicating that the change in firm value has a strong effect to the changes in the firm profitability. The results from the study on Liquidity and Leverage, using a before and after comparison from the paired t-test revealed that on average the liquidity of the firm increased while as leverage decreased. Additionally, the study also revealed that leverage and liquidity had a moderately negative correlation. Depending on the firm, profitability and growth varied and thus there was no consistent trend evident in the study. However, a before and after comparison of the variables yielded that despite the increase in profitability and growth of the firms, the results had no significant difference. The time series analysis yielded that operational performance of majority of the cross-listed firms? motive by market incentive to cross-list, increased. Jubilee Insurance was the only firm that reported an increase after cross-listing. A before and after comparison yielded that there was a decrease in operational performance but there was no statistical significant difference in the results. Additionally, liquidity and total assets had a weak positive correlation indicating that the changes in leverage does not weakly/does not correlate with the changes in total assets. The study recommends that for firms to sustain their improved firm value and financial performance post-listing, firms should not only comply with the new regulations that they have willingly subjected themselves to but, to take the extra mile to improve corporate governance, improve information disclosure exceeding the bare minimum and creating more value for shareholders.
Book Synopsis Industry Structure and Impact of Cross-Listings by : Yan Zhang
Download or read book Industry Structure and Impact of Cross-Listings written by Yan Zhang and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines how product market competition is related to the impacts of cross-listing events for both the listing firms and their domestic non-cross-listed rivals. I find that issuing firms enjoy higher abnormal returns and greater subsequent market-share increases when they share more investment opportunities with their domestic rivals. On the other hand, cross-listings have negative spillover effects on rivals that do not cross-list. This negative spillover effect is stronger for firms with similar operations to those of the cross-listing firms than it is for more disparate firms, in that the higher the interdependence of growth opportunities with the issuing firm, the higher the predation risk the non-issuing rival will be exposed to. I find the cross-sectional differences in the change of market shares and cost of capital for those rival firms. In addition, ex ante uncertainty about firm value amplifies the positive effects on issuing firms, but exacerbates the negative spillover effects on rival firms. My results are consistent with both bonding and signaling hypotheses about cross-listings and add explanations for the own and spillover impacts from the perspective of industry competition.
Book Synopsis Does the Choice of Listing Level Matter? Evidence from Foreign Firms Cross-listing in the United States by : Hicham Hadni
Download or read book Does the Choice of Listing Level Matter? Evidence from Foreign Firms Cross-listing in the United States written by Hicham Hadni and published by . This book was released on 2007 with total page 139 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study makes an important contribution to the economic and finance literature on value analysis of foreign firms cross-listing in the United States. Doidge, Karolyi and Stulz (2003) show that, at the end of 1997, foreign firms with shares cross-listed in U.S. financial markets had Tobin's q ratios significantly higher than those of firms from the same country that were not listed in the United States. I consider in a detailed value analysis the three main levels of American Depositary Receipt (ADR) listings and analyze the impact of upgrading the listing level on firms' values. I extend the work of Doidge, Karolyi and Stulz (2003) to control for listing levels as well as additional country and firm characteristics. I find significant evidence that cross-listing firms experience (i) an average increase in value of 26 percent when they upgrade their listing level from level I to level II, and (ii) an average increase in value of 38 percent when they upgrade their listing level from level II and level III.
Download or read book Look at Me Now written by and published by . This book was released on 2004 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: "We use a comprehensive 1997 survey to examine U.S. investors ̐preferences for foreign equities. We document a variety of firm characteristics that can influence U.S. investment, but the most important determinant is whether the stock is cross-listed on a U.S. exchange. Our selection bias-corrected estimates imply that firms that cross-list can increase their U.S. holdings by 8 to 11 percent of their market capitalization, roughly doubling the amount held without cross-listing. All else equal, we find that firms experience smaller increases in U.S. shareholdings upon cross-listing if they are Canadian, from English-speaking countries, are members of the MSCI World index, or had higher quality accounting standards prior to cross-listing. We argue that these findings suggest that improvements in information production explain U.S. investors ̐attraction to foreign stocks that cross-list in the United States"--Federal Reserve Board web site.
Book Synopsis Firms' Choices to Cross-list Stocks on the U.S. and the U.K. Markets by : Jingwen Mu
Download or read book Firms' Choices to Cross-list Stocks on the U.S. and the U.K. Markets written by Jingwen Mu and published by . This book was released on 2014 with total page 319 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis investigates some accounting issues that arise from firms' choices to cross-list stocks on the U.S. and the U.K. markets. Prior research shows that the benefits of cross-listing include a more liquid stock market, an increase in investor recognition, a decrease in the cost of capital, and a commitment to better corporate governance practices. However, the extent to which cross-listing can be used as an effective bonding mechanism is closely related to the choice of cross-listing destinations. Specifically, I hypothesise that differences in firm characteristics, accounting standards setting procedures, and the legal and regulatory environments between the U.S. and the U.K. markets lead to the expectation that firms cross-listed in the U.S. markets have better earnings quality than firms cross-listed in the U.K. In the context of this thesis, earnings quality refers to how precisely reported earnings convey a firm's true economic performance, and it is measured by models of accruals, earnings persistence and predictability, smoothness, and target beating. The results suggest the following. First, firms use accruals-based earnings management techniques to boost their earnings in the cross-listing year, but such evidence is only observed for firms cross-listed on the U.K markets. A further examination shows that, for the U.K. sample, the extent of earnings management is influenced by whether a firm raises new equity capital at cross-listing, while no such evidence is found for the U.S. sample. Second, the results provide mixed evidence that cross-listing firms have higher earnings quality than their home country counterparts that are not cross-listed. For firms cross-listed in the U.S., the differences in earnings quality are greater in the post-SOX period. Third, this thesis directly compares firms that choose between different cross-listing destinations and finds that firms cross-listed in the U.S. have higher earnings quality than firms cross-listed in the U.K. Fourth, home-country institutions are found to have a significant influence on cross-listing firms' reporting behaviour. The results are robust to controlling for innate factors known to affect the quality of earnings. Some interpretation issues arise when different measures of earnings quality are used, which shed light on future research directions.
Book Synopsis Adrs, Analysts, and Accuracy by : Mark H. Lang
Download or read book Adrs, Analysts, and Accuracy written by Mark H. Lang and published by . This book was released on 2012 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the relation between cross listing in the U.S., with its resulting commitment to increased disclosure, and the information environment of non-U.S. firms. We find that firms that cross-list on U.S. exchanges have greater analyst coverage and increased forecast accuracy relative to firms that are not cross listed. A time-series analysis shows that the change in analyst coverage and forecast accuracy occurs around cross listing. We also document that firms that have more analyst coverage and higher forecast accuracy have a higher valuation. Further, the change in firm value around cross listing is correlated with changes in the firm's information environment. Our findings support the hypothesis that cross-listed firms have better information environments, which are associated with higher market valuations.
Book Synopsis International Cross-Listing and the Bonding Hypothesis by : Michael R. King
Download or read book International Cross-Listing and the Bonding Hypothesis written by Michael R. King and published by . This book was released on 2013 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: The authors describe a new view of cross-listing that links the impact on firm valuation to the firm's ability to develop an active secondary market for its shares in the U.S. markets. Contrary to previous research, cross-listing may not provide benefits for all firms, even when those firms meet the highest regulatory requirements for disclosure and supervision. When cross-listed firms are divided into two groups on the basis of their share turnover in the home market relative to the U.S. market, the firms that develop active trading in the U.S. market experience an increase in valuation. Cross-listed firms that remain predominantly traded in the home market following cross-listing are valued similarly to non-cross-listed firms. To gain the full benefits of cross-listing, a foreign firm must convince investors that their shareholder rights will be protected. The effectiveness of this reputational bonding is witnessed in the amount of trading on the U.S. market relative to the home market.
Book Synopsis Drivers of Cross-listing by : Constance Antonia Wegscheider
Download or read book Drivers of Cross-listing written by Constance Antonia Wegscheider and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Obwohl das wachsende Interesse an Cross-Listings in der ganzen Welt zu einer langen Debatte unter Akademikern und Praktikern über die Motive für Cross-Listings geführt hat, wurde den Firmen bezogene Motiven bisher wenig Aufmerksamkeit geschenkt. In dieser Studie wird der Frage nachgegangen, ob Faktoren, die die Leistung eines Unternehmens in einem Schwellenland beeinflussen, dessen Entscheidung für ein Cross-Listing auf dem US-Kapitalmarkt beeinflussen. Um die Hypothese zu testen, dass multinationale Unternehmen mit Wachstumschancen in den Vereinigten Staaten ihre Aktien zweitnotieren, wurden Echtzeitdaten von 278 Unternehmen aus verschiedenen Schwellenländern erhoben. Ein logistisches Regressionsmodell ergab, dass diese Unternehmen in den Vereinigten Staaten zweitnotiert sind, um die für ihr Wachstum erforderlichen Investitionsprojekte zu finanzieren. Das Ergebnis zeigt, dass die Theorien der bisherigen Literatur zu den Motiven für Cross-Listing auch nach mehr als einem Jahrzehnt noch gültig sind und dass Lücken in wenig erforschten Bereichen geschlossen werden können.*****Although the growing interest in cross-listings around the world has led to a long debate among academics and practitioners about the motive for cross-listing, little attention has been paid to firm-related motives. The question pursued in this study if factors that direct the performance of an emerging market firm affect their decision to cross-list in the US capital market. To test the hypothesis that multinational enterprises with growth opportunities cross-list in the United States, real-time data were collected from 278 firms across various emerging markets. A logistic regression model revealed that these firms cross-listed in the United States to finance investment projects required for their growth. The outcome shows that the theories of previous literatures regarding the motives for cross-listing are valid after more than a decade and that gaps can be filled in little-researched areas.
Book Synopsis Trading Company Shares at Multiple Stock Exchanges. Costs and Benefits of U.S. Cross-Listings by : Laura Kalinska
Download or read book Trading Company Shares at Multiple Stock Exchanges. Costs and Benefits of U.S. Cross-Listings written by Laura Kalinska and published by GRIN Verlag. This book was released on 2016-06-17 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: Bachelor Thesis from the year 2015 in the subject Business economics - Investment and Finance, grade: 96/110, course: Principles of International Finance, language: English, abstract: This thesis project aims to test the hypothesis whether or not there exists enough empirical evidence to prove that companies from developed countries with well-functioning capital markets have seen deteriorating benefits from cross-listing in the United States. We find evidence that support our hypothesis in light of the significant number of European companies terminat-ing their U.S. cross-listings after requirements for deregistering listings from the U.S. became less stringent in the year 2007. The trend also continued with the number of cross-listings by companies from the developed world steadily declining during the subsequent five years. The most cited reasons for cross-listing in the United States, such as greater access to investors, liquidity, a higher valuation and thus a lower cost of capital seems not to hold as strongly anymore. At least not for companies that come from countries where its capital markets have experienced a steady development in corporate governance standards so as to match that of the United States. Evidence point to the fact that the benefits that held for all non U.S. firms still hold strongly only for those companies coming from emerging economies and whose equity market standards are still well below that of stock exchanges in the United States.
Book Synopsis Determinants of Involuntary Cross-Listing by : Yoon Koh
Download or read book Determinants of Involuntary Cross-Listing written by Yoon Koh and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uncovers the phenomenon of involuntary CL, which many stock exchanges have strategically adopted by simplifying listing requirements for companies already listed in other stock markets, focusing on US restaurant companies. The number of involuntarily cross-listed US restaurant companies greatly increased to 50 percent of domestically listed US restaurant companies while those companies are largely unaware of the phenomenon. The empirical investigation identified determinants of involuntary CL by examining ten factors, including size, firm growth opportunities, leverage, financial flexibility, international operation, profitability, overall German economic condition, industry growth opportunities, restaurant type, and local operation. The study found three determinants - large size, favorable economic condition in Germany and positive industry growth opportunities - utilizing the sample that covers the entire periods of involuntary CL of US restaurant companies on the FSE.
Book Synopsis Cost of Capital Effects and Changes in Growth Expectations Around U.S. Cross-Listings by : Luzi Hail
Download or read book Cost of Capital Effects and Changes in Growth Expectations Around U.S. Cross-Listings written by Luzi Hail and published by . This book was released on 2011 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines whether cross-listing in the U.S. reduces foreign firms' costs of capital. While prior studies show that U.S. cross-listings are associated with substantial increases in firm value, the sources of these valuation effects are not well understood. We estimate cost of capital effects implied by market prices and analyst forecasts, which accounts for changes in growth expectations around cross-listings. We find strong evidence that firms with cross-listings on U.S. exchanges experience a significant decrease in their cost of capital between 70 to 120 basis points. These effects are sustained and still present after the passage of the Sarbanes-Oxley Act. Consistent with the bonding hypothesis, we find smaller cost of capital reductions for firms that cross-list in the over-the-counter market and for exchange-listed firms from countries with stronger home-country institutions. For exchange-traded cross-listings, the reduction in cost of capital accounts for more than half of the increase in value around cross-listings, whereas for the other types of cross-listings the valuation effects are primarily attributable to contemporaneous revisions in growth expectations.
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