Effect of cross-listing on the local stock return and profitability performance of listed companies in the Philippine Stock Exchange

• Main Author: Abriol, Jose Vittorio D.
• Format: text
• Language: English
• Published: Animo Repository 2015
• Subjects: Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18065
• Institution: De La Salle University

In the Philippines, companies are starting to participate in the globalization of markets through expansion. As a result, cross-listing of stocks has been used as one of the alternative strategies in order to take advantage of the opportunities outside their respective domestic markets. In this study, the effect of cross-listing of stocks on the stock returns and the profitability performance of publicly listed companies in the Philippines Stock Exchange will be evaluated using Market Adjusted Model to determine the abnormal returns and a t-test to measure its significance. This study also observed the abnormal and cumulative abnormal returns experienced for each industry. While the profitability performance will be measured by comparing the ROA and ROE ratios of the listed companies, eight (8) quarters before and after the listing date. A Two Population Means Test and Multiple Regression model were used to measure the significance of changes in ROA and ROE. The results reveal that there is no significant effect in the abnormal returns that were measured on a daily basis before and after cross-listing. On the other hand, a significant effect on the cumulative abnormal returns of the stocks was evident wherein it is a positive trend before listing and a sudden negative trend after cross-listing. Furthermore, there was no significant effect in the change on the profitability performance of the company during the period of cross-listing. The findings of the study imply that cross-listing conveys information about the potential of the firm and should be considered as one of the financial strategies in the long run.