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Valuation Effects of foreign Company Listings on U.S. Exchanges

  • Anant K Sundaram

    (University of Michigan)

  • Dennis E Logue

    (Dartmouth College)

Registered author(s):

    This study examines post-listing equity price performance of foreign firms which cross-listed sponsored American Depository Receipts (ADRs) on the New York and the American Stock Exchanges during the period 1982-1992. We use three valuation metrics – price-to-book, price-to-cash-earnings, and price-to-earnings – which are adjusted for the home country and world industry indices to which the listing firm's stock belongs. We find positive valuation effects associated with cross-listing for both country-benchmarked and industry-benchmarked price ratios. Variables that proxy for home country characteristics such as governance styles, disclosure quality, market liquidity, and so forth are unable to explain the cross-sectional variation in the data. Our results thus suggest that cross-listing in the U.S. enhances valuations for listing firms by simply reducing the overall effect of segmentation among different national securities markets.© 1996 JIBS. Journal of International Business Studies (1996) 27, 67–88

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

    Volume (Year): 27 (1996)
    Issue (Month): 1 (March)
    Pages: 67-88

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    Handle: RePEc:pal:jintbs:v:27:y:1996:i:1:p:67-88
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