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Cross-Listings and M&A Activity: Transatlantic Evidence

Author

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  • Pasi Tolmunen
  • Sami Torstila

Abstract

We analyze whether European firms choose to list shares in the US to facilitate acquisitions. Evidence from a sample of 547 European companies shows that cross-listed firms are significantly more active in acquiring US companies than are their domestically listed peers. This pattern holds even after we account for self-selection in the cross-listing decision. Crosslisted firms are also more likely to use equity payment in large transactions, but after taking self-selection into account, transaction size becomes the key determinant of the use of equity. After cross-listing, the proportion of aggregate M&A volume financed with equity increases.

Suggested Citation

  • Pasi Tolmunen & Sami Torstila, 2005. "Cross-Listings and M&A Activity: Transatlantic Evidence," Financial Management, Financial Management Association, vol. 34(1), Spring.
    • Handle: RePEc:fma:fmanag:tolmunentorstila05
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    Cited by:

    1. Forssbæck , Jens & Oxelheim, Lars, 2008. "Financial Determinants of Foreign Direct Investment," Working Paper Series 741, Research Institute of Industrial Economics.
    2. Elena Skouratova & John Wald, 2013. "How crosslisting affects merger and acquisition activity," Review of Quantitative Finance and Accounting, Springer, vol. 40(2), pages 319-339, February.
    3. Peng, Mike W. & Su, Weichieh, 2014. "Cross-listing and the scope of the firm," Journal of World Business, Elsevier, vol. 49(1), pages 42-50.
    4. Forssbaeck, Jens & Oxelheim, Lars, 2008. "Finance-specific Factors as Drivers of Cross-border Investment – An OLI Perspective," Working Paper Series 767, Research Institute of Industrial Economics.
    5. Forssbæck, Jens & Oxelheim, Lars, 2011. "Corporate financial determinants of foreign direct investment," The Quarterly Review of Economics and Finance, Elsevier, vol. 51(3), pages 269-282, June.
    6. Forssbæck, Jens & Oxelheim, Lars, 2008. "Finance-specific factors as drivers of cross-border investment--An empirical investigation," International Business Review, Elsevier, vol. 17(6), pages 630-641, December.
    7. Zhou, Haoyong & He, Fan & Wang, Yangbo, 2017. "Did family firms perform better during the financial crisis? New insights from the S&P 500 firms," Global Finance Journal, Elsevier, vol. 33(C), pages 88-103.
    8. Bessler, Wolfgang & Kaen, Fred R. & Kurmann, Philipp & Zimmermann, Jan, 2012. "The listing and delisting of German firms on NYSE and NASDAQ: Were there any benefits?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 22(4), pages 1024-1053.
    9. Del Bosco, Barbara & Misani, Nicola, 2016. "The effect of cross-listing on the environmental, social, and governance performance of firms," Journal of World Business, Elsevier, vol. 51(6), pages 977-990.
    10. Luo, Yongli & Fang, Fang & Esqueda, Omar A., 2012. "The overseas listing puzzle: Post-IPO performance of Chinese stocks and ADRs in the U.S. market," Journal of Multinational Financial Management, Elsevier, vol. 22(5), pages 193-211.

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