Bonding to the Improved Disclosure Environment in the US: Firms’ Listing Choices and their Capital Market Consequences

This paper examines whether the current reporting and disclosure requirements for foreign registrants in the United States affect foreign firms' decisions to list on a U.S. exchange. We find that while firms from a weak disclosure environment are more likely to cross-list and either trade over-...

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Main Authors: Hope, Ole-Kristian, KANG, Tony, ZANG, Yoonseok
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Language:English
Published: Institutional Knowledge at Singapore Management University 2005
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Online Access:https://ink.library.smu.edu.sg/soa_research/210
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spelling sg-smu-ink.soa_research-12092017-06-21T03:02:39Z Bonding to the Improved Disclosure Environment in the US: Firms’ Listing Choices and their Capital Market Consequences Hope, Ole-Kristian KANG, Tony ZANG, Yoonseok This paper examines whether the current reporting and disclosure requirements for foreign registrants in the United States affect foreign firms' decisions to list on a U.S. exchange. We find that while firms from a weak disclosure environment are more likely to cross-list and either trade over-the-counter or be placed privately among institutional investors, they are less likely to list on an exchange in which firms are required to comply with U.S. GAAP. This is consistent with the idea that the decrease in the potential private control benefits accruing to managers discourages them from listing on an organized exchange. We further conduct pricing tests to investigate whether the choice relating to the mode of listing has capital market consequences. These tests indicate that: (1) exchange-listing firms receive a higher valuation (i.e., Tobin's q) than non-exchange-listing firms; and (2) exchange-listing firms domiciled in a higher disclosure regime, who incur lower costs of U.S. GAAP compliance, generally receive a higher valuation than exchange-listing firms from a lower-disclosure regime. Overall, the lower tendency of firms domiciled in a lower disclosure regime to list on an organized exchange appears to be consistent with the smaller valuation benefit they receive from the listing. 2005-02-01T08:00:00Z text https://ink.library.smu.edu.sg/soa_research/210 Research Collection School Of Accountancy eng Institutional Knowledge at Singapore Management University Bonding Cross-Listing Disclosure Accounting Corporate Finance
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Bonding
Cross-Listing
Disclosure
Accounting
Corporate Finance
spellingShingle Bonding
Cross-Listing
Disclosure
Accounting
Corporate Finance
Hope, Ole-Kristian
KANG, Tony
ZANG, Yoonseok
Bonding to the Improved Disclosure Environment in the US: Firms’ Listing Choices and their Capital Market Consequences
description This paper examines whether the current reporting and disclosure requirements for foreign registrants in the United States affect foreign firms' decisions to list on a U.S. exchange. We find that while firms from a weak disclosure environment are more likely to cross-list and either trade over-the-counter or be placed privately among institutional investors, they are less likely to list on an exchange in which firms are required to comply with U.S. GAAP. This is consistent with the idea that the decrease in the potential private control benefits accruing to managers discourages them from listing on an organized exchange. We further conduct pricing tests to investigate whether the choice relating to the mode of listing has capital market consequences. These tests indicate that: (1) exchange-listing firms receive a higher valuation (i.e., Tobin's q) than non-exchange-listing firms; and (2) exchange-listing firms domiciled in a higher disclosure regime, who incur lower costs of U.S. GAAP compliance, generally receive a higher valuation than exchange-listing firms from a lower-disclosure regime. Overall, the lower tendency of firms domiciled in a lower disclosure regime to list on an organized exchange appears to be consistent with the smaller valuation benefit they receive from the listing.
format text
author Hope, Ole-Kristian
KANG, Tony
ZANG, Yoonseok
author_facet Hope, Ole-Kristian
KANG, Tony
ZANG, Yoonseok
author_sort Hope, Ole-Kristian
title Bonding to the Improved Disclosure Environment in the US: Firms’ Listing Choices and their Capital Market Consequences
title_short Bonding to the Improved Disclosure Environment in the US: Firms’ Listing Choices and their Capital Market Consequences
title_full Bonding to the Improved Disclosure Environment in the US: Firms’ Listing Choices and their Capital Market Consequences
title_fullStr Bonding to the Improved Disclosure Environment in the US: Firms’ Listing Choices and their Capital Market Consequences
title_full_unstemmed Bonding to the Improved Disclosure Environment in the US: Firms’ Listing Choices and their Capital Market Consequences
title_sort bonding to the improved disclosure environment in the us: firms’ listing choices and their capital market consequences
publisher Institutional Knowledge at Singapore Management University
publishDate 2005
url https://ink.library.smu.edu.sg/soa_research/210
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