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Equity cross-listings in the U.S. and the price of debt

Author

Listed:
  • Ryan T. Ball

    (University of Michigan)

  • Luzi Hail

    (University of Pennsylvania)

  • Florin P. Vasvari

    (London Business School)

Abstract

Using a large panel from 46 countries over 20 years, we find that non-U.S. firms issue corporate bonds more frequently and at lower offering yields following an equity cross-listing on a U.S. exchange. Firms issue more bonds through public offerings instead of private placements and in foreign markets rather than at home, in both cases at significantly lower yields. Moreover, the debt-related benefits are concentrated among firms domiciled in countries with less private benefits of control, efficient debt enforcement, and developed bond markets, suggesting that equity cross-listings cannot completely offset the impact of weak home country institutions. The results support the notion that the monitoring, transparency, and visibility benefits brought about by equity cross-listings on U.S. exchanges are valuable to bond investors.

Suggested Citation

  • Ryan T. Ball & Luzi Hail & Florin P. Vasvari, 2018. "Equity cross-listings in the U.S. and the price of debt," Review of Accounting Studies, Springer, vol. 23(2), pages 385-421, June.
    • Handle: RePEc:spr:reaccs:v:23:y:2018:i:2:d:10.1007_s11142-017-9424-0
    DOI: 10.1007/s11142-017-9424-0
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    More about this item

    Keywords

    F34; G12; G15; G38; K22;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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