Does Cross Listing In The Us Improve Investment Efficiency Evidence From Uk Firms

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Does Cross-Listing in the US Improve Investment Efficiency? Evidence from UK Firms

Author : Abed Al-Nasser Abdallah
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Does Cross-Listing in the US Improve Investment Efficiency? Evidence from UK Firms by : Abed Al-Nasser Abdallah

Download or read book Does Cross-Listing in the US Improve Investment Efficiency? Evidence from UK Firms written by Abed Al-Nasser Abdallah and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine whether managers of cross-listed firms improve corporate investment efficiency through learning from the stock market upon cross-listing. Using a sample of UK firms cross-listed on US regulated and unregulated stock markets, we find that cross-listed firms on unregulated markets invest more efficiently than non-cross-listed firms following cross-listing. Moreover, we find that cross-listed firms improve their investment efficiency post cross-listing. Furthermore, we find firms with low level of private information embedded in their stock prices, and firms with higher board independence improve their investment post cross-listing. Our findings suggest that managers of cross-listed firms are guided by firm-specific characteristic more than by stock market signals when they embark on new investment projects. We also find evidence that cross-listed firms on regulated exchanges perform poorly after cross-listing, whereas those cross-listed on unregulated exchange experience high performance post cross-listing.

Firms' Choices to Cross-list Stocks on the U.S. and the U.K. Markets

Author : Jingwen Mu
Publisher :
ISBN 13 :
Total Pages : 319 pages
Book Rating : 4.:/5 (896 download)

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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.

Investor Protection, Investment Efficiency and Value

Author : Fan He
Publisher :
ISBN 13 :
Total Pages : 64 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Investor Protection, Investment Efficiency and Value by : Fan He

Download or read book Investor Protection, Investment Efficiency and Value written by Fan He and published by . This book was released on 2016 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the impact of improved investor protection due to cross-listing on foreign firms' investment decisions to explore the channels through which cross-listing increases foreign firms' value. While we find that cross-listing increases firms' capital expenditures and M&A activities, cross-listed firms also invest more in R&D, make better acquisition decisions, and have higher profitability compared to non-cross-listed firms. Moreover, cross-listing is associated with better cash utilization by foreign firms' for investments. These improvements in investments and cash utilization are more pronounced for firms cross-listed on U.S. exchanges and for firms from countries with weaker investor protection laws.

Discussion of the empirical evidence regarding the merit of companies cross-listing their shares on foreign equity markets

Author : Matthias Hilgert
Publisher : GRIN Verlag
ISBN 13 : 3638373304
Total Pages : 18 pages
Book Rating : 4.6/5 (383 download)

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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.

Does Cross Listing Lead to Higher Firm Growth

Author : Inder K. Khurana
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)

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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.

Why Do U.S. Cross-listings Matter?

Author : John Ammer
Publisher :
ISBN 13 :
Total Pages : 42 pages
Book Rating : 4.3/5 (121 download)

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Book Synopsis Why Do U.S. Cross-listings Matter? by : John Ammer

Download or read book Why Do U.S. Cross-listings Matter? written by John Ammer and published by . This book was released on 2008 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the underlying determinants of home bias using a comprehensive sample of U.S. investor holdings of foreign stocks. We document that U.S. cross-listings are economically important, as U.S. ownership in a foreign firm roughly doubles upon cross-listing in the United States. We explore the cross-sectional variation in this "cross-listing effect" and show that increases in U.S. investment are largest in firms from weak accounting backgrounds and in firms that are otherwise informationally opaque, indicating that U.S. investors value the improvements in disclosure associated with cross-listing. We confirm that relative equity valuations rise for cross-listed stocks, and provide evidence suggesting that valuation increases are due in part to increases in U.S. shareholder demand and in part to the fact that the equities become more attractive to non-U.S. shareholders.

Look at Me Now

Author :
Publisher :
ISBN 13 :
Total Pages : 62 pages
Book Rating : 4.3/5 (121 download)

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Book Synopsis Look at Me Now by :

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.

U.S. Cross-Listings and the Private Benefits of Control

Author : Craig Doidge
Publisher :
ISBN 13 :
Total Pages : 45 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis U.S. Cross-Listings and the Private Benefits of Control by : Craig Doidge

Download or read book U.S. Cross-Listings and the Private Benefits of Control written by Craig Doidge and published by . This book was released on 2008 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: Non-U.S. firms that cross-list on U.S. exchanges have voting premiums that are on average 43% lower than other non-U.S. firms that do not cross-list. Using a panel data set comprised of 745 firms that have dual class shares, this paper shows that the difference in voting premiums is statistically significant after controlling for firm and country level characteristics and that this result is robust to alternative benchmarks and methodologies. Further, it finds that the difference in voting premiums is larger for firms from countries that provide poor protection to minority investors. An event study shows that, on average, both the high and low voting share classes benefit when firms announce they will cross-list in the U.S. However, the low voting class benefits by a larger amount, which leads to the decrease in the voting premium. Overall, the evidence supports the bonding hypothesis: cross-listing in the U.S. improves the protection afforded to minority investors and decreases the private benefits of control.

Cross-Listing Performance and Insider Ownership

Author : Omar A. Esqueda
Publisher :
ISBN 13 :
Total Pages : 43 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Cross-Listing Performance and Insider Ownership by : Omar A. Esqueda

Download or read book Cross-Listing Performance and Insider Ownership written by Omar A. Esqueda and published by . This book was released on 2015 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Insider-owned firms pursue U.S. cross-listings following periods of extraordinary performance. However, the long-run post-cross-listing abnormal returns become negative only for insider-controlled cross-listings. We find that the Sarbanes-Oxley Act (SOX) has mitigated the market-timing attempts as negative abnormal returns are limited to the pre-SOX period, supporting a cross-listing bonding benefit after U.S. securities regulation was enhanced. In addition, investors anticipate future operating performance as stock returns incorporate forthcoming operating outcomes one and two years ahead. Whereas capital-raising cross-listings show better operating performance than non-capital-raising, the returns of capital-raising firms are more sensitive to the potential agency problems created by insider-ownership.

Protection of Minority Shareholder Interests, Cross-listings in the United States, and Subsequent Equity Offerings

Author : William A. Reese
Publisher :
ISBN 13 :
Total Pages : 60 pages
Book Rating : 4.0/5 ( download)

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Book Synopsis Protection of Minority Shareholder Interests, Cross-listings in the United States, and Subsequent Equity Offerings by : William A. Reese

Download or read book Protection of Minority Shareholder Interests, Cross-listings in the United States, and Subsequent Equity Offerings written by William A. Reese and published by . This book was released on 2001 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the hypothesis that non-U.S. firms cross-list in the United States to increase protection of their minority shareholders. Cross-listing on an organized exchange (NYSE or Nasdaq) in the U.S. subjects a non-U.S. firm to a number of provisions of U.S. securities law and requires the firm to conform to U.S. GAAP. It therefore increases the expected cost to managers of extracting private benefits, and commits the firm to protecting minority shareholders' interests. The expected relation between the quantity of cross-listings and shareholder protection in the home country is ambiguous, because managers will consider both expected private benefits and the public value of their shares. However, there are clear predictions about the relation between subsequent equity issues, shareholder protection and cross-listings: 1) Equity issues increase following all cross-listings, regardless of shareholder protection. 2) The increase should be larger for cross-listings from countries with weak protection. 3) Equity issues following cross-listings in the U.S. will tend to be in the U.S. for firms from countries with strong protection and outside the U.S. for firms from countries with weak protection. We find strong evidence supporting predictions 1) and 3), and weak evidence consistent with hypothesis 2). Overall, the desire to protect shareholder rights appears to be one reason why some non-U.S. firms cross-list in the United States. However, it probably is not an important determinant of the large recent increase in cross-listings, because legal requirements potentially deter a number of firms that do have a demand for equity capital from cross-listing in the U.S.

Cross Listing and Firm Value - Corporate Governance or Market Segmentation? An Empirical Study of the Stock Market

Author : Andy G. Ji
Publisher :
ISBN 13 :
Total Pages : 36 pages
Book Rating : 4.:/5 (129 download)

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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.

Does the Choice of Listing Level Matter? Evidence from Foreign Firms Cross-listing in the United States

Author : Hicham Hadni
Publisher :
ISBN 13 :
Total Pages : 139 pages
Book Rating : 4.:/5 (673 download)

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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.

The Diminishing Benefits of U.S. Cross-Listing

Author : Fan He
Publisher :
ISBN 13 :
Total Pages : 76 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis The Diminishing Benefits of U.S. Cross-Listing by : Fan He

Download or read book The Diminishing Benefits of U.S. Cross-Listing written by Fan He and published by . This book was released on 2016 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: On March 21, 2007, SEC passed Rule 12h-6 to make it easier for cross-listed firms to deregister from the U.S. market and escape its regulatory costs. Using difference-in-difference tests, we find that, on average, Rule 12h-6's passage induced an increase in voting premium, a decline in equity raising, and a decline in cross-listing premium. These effects are observed for exchange-listed firms, and for firms from countries with weak investor protection. We conclude that while cross-listed firms are still valued at a significant premium over non-cross-listed firms, the rule decreased the value of commitment to the U.S. regulatory system.

Cross-Listing and Firm Growth

Author : Inder K. Khurana
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)

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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.

Firm Value and Cross-listings

Author : Nicola Cetorelli
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (837 download)

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Book Synopsis Firm Value and Cross-listings by : Nicola Cetorelli

Download or read book Firm Value and Cross-listings written by Nicola Cetorelli and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the valuation impact of a firm's decision to cross-list on a more (or less) prestigious stock exchange relative to its own domestic market. We use network analysis to derive broad market-based measures of prestige for forty-five country or regional stock exchange destinations between 1990 and 2006. We find that firms crosslisting in a more prestigious market enjoy significant valuation gains over the five-year period following the listing. We also document a reverse effect for firms cross-listing in less prestigious markets: These firms experience a significant decline in valuation over the five years following the listing. The reputation of the cross-border listing destinations is therefore a useful signal of a firm's value going forward. Our findings are consistent with the view that cross-listing in a prestigious market enhances a firm's visibility, strengthens corporate governance, and lowers informational frictions and capital costs. -- Cross-listings ; network analysis

Three Essays on the Effects of the Exchange Act Rule 12h-6 on Cross-listings of Foreign Firms in the U.S. Market

Author : Pratanphorn Piriyakul-Frye
Publisher :
ISBN 13 :
Total Pages : 180 pages
Book Rating : 4.:/5 (18 download)

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Book Synopsis Three Essays on the Effects of the Exchange Act Rule 12h-6 on Cross-listings of Foreign Firms in the U.S. Market by : Pratanphorn Piriyakul-Frye

Download or read book Three Essays on the Effects of the Exchange Act Rule 12h-6 on Cross-listings of Foreign Firms in the U.S. Market written by Pratanphorn Piriyakul-Frye and published by . This book was released on 2018 with total page 180 pages. Available in PDF, EPUB and Kindle. Book excerpt: The 2007 Exchange Act Rule 12h-6 relaxes the deregistration requirements for the U.S.-listed foreign firms to leave the U.S. market, opening an opportunity to examine the benefit and costs of listing in the U.S market for foreign firms. Using a sample of all U.S.-exchange cross-listing events during 1998-2012, the results document that the U.S. exchanges are more likely to attract a larger pool of foreign listing activities in the post-Rule 12h-6 period. This increased attractiveness of the U.S market, however, is worrisome as the post-Rule 12h-6 listings appear to be more pronounced among firms from countries with weaker investor protection. Likewise, the critical evidence, including a substantial decline in valuation premiums of U.S. cross-listing, and a significant increase in valuation gap between the U.S. domestic and the U.S.-listing foreign firms, raises more concern about the adverse impact of the new rule. Overall, the results suggest that while the rule enhanced the attractiveness of the U.S. market, its unintended consequences such as the weakening disclosure requirements and protection system can provoke a moral hazard issue in the U.S. cross-listing and ultimately may imperil the supremacy of the U.S. capital market.

The Long-Term Effects of Cross-Listing, Investor Recognition, and Ownership Structure on Valuation

Author : Michael R. King
Publisher :
ISBN 13 :
Total Pages : 41 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis The Long-Term Effects of Cross-Listing, Investor Recognition, and Ownership Structure on Valuation by : Michael R. King

Download or read book The Long-Term Effects of Cross-Listing, Investor Recognition, and Ownership Structure on Valuation written by Michael R. King and published by . This book was released on 2013 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: The widening of a foreign firm's U.S. investor base and the improved information environment associated with cross-listing on a U.S. exchange are distinct effects. Valuations of Canadian firms peak in the year of cross-listing and fall monotonically thereafter, irregardless of the level of U.S. investor holdings or the ownership structure of the firm. Cross-listed firms with a 20%+ blockholder attract a similar number of U.S. institutional investors as widely-held firms on average, but experience a lower increase in valuation at high levels of investor recognition. While U.S. investors are less willing to invest in firms with dual-class shares, these firms benefit more from cross-listing even when they fail to widen their U.S. investor base, suggesting that the reduction in information asymmetry between controlling and minority investors has a separate impact on valuation for firms where agency problems are greatest.