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On the fortunes of stock exchanges and their reversals: evidence from foreign listings

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  • Fernandes, Nuno
  • Giannetti, Mariassunta

Abstract

Using a sample that provides unprecedented detail on foreign listings, new listings, and delistings for 29 exchanges in 24 countries starting from the early 1980s, we document a growing tendency of listings to concentrate in the U.S. and the U.K., and large changes in all exchanges’ ability to attract foreign companies. We highlight the following determinants of these patterns. First, during the sample period, investor protection improved in many countries. As investor protection improves in the country of origin, firms become less likely to list in countries with weak investor protection, but more likely to list in countries with strong investor protection, especially in the U.K. and the U.S. Second, we show that foreign listings are related to the exchange’s market valuation in the same way that domestic equity issues are and that firms that are more difficult to evaluate are more inclined to list in foreign exchanges with high valuations. JEL Classification: G15, G38, M41, M45, F40

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Bibliographic Info

Paper provided by European Central Bank in its series Working Paper Series with number 1585.

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Date of creation: Sep 2013
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Handle: RePEc:ecb:ecbwps:20131585

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Keywords: Cross-listings; investor protection; market timing; SOX;

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Citations

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Cited by:
  1. Sarkissian, Sergei & Schill, Michael, 2010. "Cross listing waves," MPRA Paper 27545, University Library of Munich, Germany.
  2. Korczak, Adriana & Korczak, Piotr, 2013. "The development of emerging stock markets and the demand for cross-listing," Journal of Empirical Finance, Elsevier, vol. 24(C), pages 63-77.
  3. Nicola Cetorelli & Stavros Peristiani, 2010. "Firm value and cross-listings: the impact of stock market prestige," Staff Reports 474, Federal Reserve Bank of New York.
  4. Sarkissian, Sergei & Schill, Michael, 2010. "Why are U.S. firms listed in foreign markets worth more?," MPRA Paper 27543, University Library of Munich, Germany.

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