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Why are U.S. firms listed in foreign markets worth more?

Author

Listed:
  • Sarkissian, Sergei
  • Schill, Michael

Abstract

An expanding literature asserts that non-U.S. firms achieve a value premium for listing on U.S. equity markets. In this paper we examine the foreign listing premium across a global sample of home and host markets, including U.S. firms that list on non-U.S. stock exchanges. We find that the value premium of U.S. firms that list abroad is similar to that of non-U.S. firms that list on U.S. exchanges, and that many other home and host markets manifest a foreign listing premium. The cross-sectional variation in the value premium appears to have little association with any unique institutional feature of the market; rather it is related to variation in pre-listing valuation ratios. We establish that the foreign listing premium disappears once we control for the firm’s pre-listing valuation ratio.

Suggested Citation

  • Sarkissian, Sergei & Schill, Michael, 2010. "Why are U.S. firms listed in foreign markets worth more?," MPRA Paper 27543, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:27543
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    File URL: https://mpra.ub.uni-muenchen.de/28653/3/MPRA_paper_28653.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Petacchi, Reining, 2015. "Information asymmetry and capital structure: Evidence from regulation FD," Journal of Accounting and Economics, Elsevier, vol. 59(2), pages 143-162.

    More about this item

    Keywords

    Cross listings; Firm valuation; Rule of law; 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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