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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, M4, F40

Suggested Citation

  • Fernandes, Nuno & Giannetti, Mariassunta, 2013. "On the fortunes of stock exchanges and their reversals: evidence from foreign listings," Working Paper Series 1585, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:20131585
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    Cited by:

    1. Sarkissian, Sergei & Schill, Michael, 2010. "Why are U.S. firms listed in foreign markets worth more?," MPRA Paper 27543, University Library of Munich, Germany.
    2. Dodd, Olga & Louca, Christodoulos & Paudyal, Krishna, 2015. "The determinants of foreign trading volume of stocks listed in multiple markets," Journal of Economics and Business, Elsevier, vol. 79(C), pages 38-61.
    3. Dariusz Wójcik & Csaba Burger, 2010. "Listing BRICs: Stock Issuers from Brazil, Russia, India, and China in New York, London, and Luxembourg," Economic Geography, Clark University, vol. 86(3), pages 275-296, July.
    4. Ghadhab, Imen & M’rad, Mouna, 2018. "Does US cross-listing come with incremental benefit for already UK cross-listed firms," The Quarterly Review of Economics and Finance, Elsevier, vol. 69(C), pages 188-204.
    5. Sarkissian, Sergei & Schill, Michael J., 2016. "Cross-Listing Waves," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 51(1), pages 259-306, February.
    6. Chen, Chunhua & Shi, Songhe & Song, Xiaoping & Zheng, Steven Xiaofan, 2021. "Financial constraints and cross-listing," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 71(C).
    7. 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.
    8. Imen Ghadhab & Slaheddine Hellara & Abdelkader Derbali, 2018. "Why do firms make an additional cross-listing? An empirical investigation using multiple failure time model," Journal of Asset Management, Palgrave Macmillan, vol. 19(3), pages 191-203, May.
    9. 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.
    10. Meisami, Alex & Misra, Lalatendu & Mehran, Jamshid & Shi, Yilun, 2014. "Foreign capital raising by Indian firms: An examination of domestic stock price response," Global Finance Journal, Elsevier, vol. 25(3), pages 181-202.

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    More about this item

    Keywords

    Cross-listings; investor protection; market timing; SOX;
    All these keywords.

    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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