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

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  • Michael R. King
  • Dan Segal

Abstract

We show that investor recognition and bonding associated with a U.S. cross-listing are distinct effects using a sample of Canadian firms. In contrast to the post-listing decline documented in the literature, we find that cross-listed firms with a single class of shares enjoy a permanent increase in valuation if they attract and maintain investor recognition over time. Valuations of firms that fail to widen their U.S. shareholder base return to pre-listing levels within two years. Cross-listed firms with dual-class shares exhibit a permanent increase in valuation regardless of the level of U.S. investor holdings, consistent with firm-level bonding. The Author 2008. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org., Oxford University Press.

Suggested Citation

  • Michael R. King & Dan Segal, 2009. "The Long-Term Effects of Cross-Listing, Investor Recognition, and Ownership Structure on Valuation," Review of Financial Studies, Society for Financial Studies, vol. 22(6), pages 2393-2421, June.
  • Handle: RePEc:oup:rfinst:v:22:y:2009:i:6:p:2393-2421
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    File URL: http://hdl.handle.net/10.1093/rfs/hhn050
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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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