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The nature of the foreign listing premium: A cross-country examination

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  • Sarkissian, Sergei
  • Schill, Michael J.

Abstract

An expanding literature asserts that non-US firms achieve a unique valuation premium for listing on US equity markets. In this paper we test the uniqueness of the US foreign listing premium by examining the premium achieved by foreign listings across a global set of stock exchanges. We highlight that the documented valuation premium for listing on US exchanges is not unique but common to many home and host markets including US firms that list abroad. The cross-sectional variation in the valuation premium appears to have little association with such cross-country institutional features as investor protection rules, law enforcement practice, or accounting disclosure standards. Rather the premium appears most related to variation in pre-listing valuation ratios.

Suggested Citation

  • Sarkissian, Sergei & Schill, Michael J., 2012. "The nature of the foreign listing premium: A cross-country examination," Journal of Banking & Finance, Elsevier, vol. 36(9), pages 2494-2511.
  • Handle: RePEc:eee:jbfina:v:36:y:2012:i:9:p:2494-2511
    DOI: 10.1016/j.jbankfin.2012.05.007
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    1. repec:eee:finlet:v:21:y:2017:i:c:p:85-91 is not listed on IDEAS
    2. Nicola Cetorelli & Stavros Peristiani, 2015. "Firm Value and Cross Listings: The Impact of Stock Market Prestige," Journal of Risk and Financial Management, MDPI, Open Access Journal, vol. 8(1), pages 1-31, March.
    3. Jyh-Dean Hwang, 2013. "Are There Valuation and Operating Performance Gains from International Cross Listing? Evidence from Taiwan’s Depositary Receipt Issuers," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 3(2), pages 137-163, December.
    4. repec:spr:eurasi:v:3:y:2013:i:2:d:10.14208_ebr.2013.03.02.002 is not listed on IDEAS
    5. Dodd, Olga & Frijns, Bart, 2015. "Cross-listing decisions and the foreign bias of investors," Finance Research Letters, Elsevier, vol. 15(C), pages 160-166.
    6. Busaba, Walid Y. & Guo, Lin & Sun, Zhenzhen & Yu, Tong, 2015. "The dark side of cross-listing: A new perspective from China," Journal of Banking & Finance, Elsevier, vol. 57(C), pages 1-16.
    7. repec:eee:riibaf:v:41:y:2017:i:c:p:109-124 is not listed on IDEAS

    More about this item

    Keywords

    Cross listings; Firm valuation; Rule of law; Disclosure; Stock exchanges; Tobin’s Q;

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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