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International Listings of Stocks: The Case of Canada and the U.S

Listed author(s):
  • Stephen R Foerster

    (The University of Western Ontario)

  • G Andrew Karolyi

    (The Ohio State University)

The globalization of financial markets has seen ever-increasing numbers of firms choosing to list their stocks on foreign exchanges. We examine whether the extent of economic and financial market integration (or segmentation) between a firm's home country and listing country influences stock price reaction by examining the case of two “similar” countries: the U.S. and Canada. During the 100 days before the week of interlisting in the U.S., (risk-adjusted) stock prices of Canadian firms rise (on average) by over 9.4%, rise by an additional 2% around the interlisting date, but follow with a corresponding drop of 9.7% in the 100 days after interlisting. We interpret this evidence to be consistent with the financial market segmentation between Canada and the U.S. However, a subsample of Canadian resource firms does not exhibit these stock price effects, suggesting industry-related factors may also be an important determinant of integration. We also find average trading volume in interlisted stocks more than doubles in the months following interlisting.© 1993 JIBS. Journal of International Business Studies (1993) 24, 763–784

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Article provided by Palgrave Macmillan & Academy of International Business in its journal Journal of International Business Studies.

Volume (Year): 24 (1993)
Issue (Month): 4 (December)
Pages: 763-784

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Handle: RePEc:pal:jintbs:v:24:y:1993:i:4:p:763-784
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