The long-term effects of cross-listing, investor recognition, and ownership structure on valuation

• Main Authors: KING, Michael R., SEGAL, Dan
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2009
• Subjects: equity valuation; international cross-listing; investor recognition; institutional investors; ownership structure; Accounting; Corporate Finance
• Online Access: https://ink.library.smu.edu.sg/soa_research/803; https://ink.library.smu.edu.sg/context/soa_research/article/1802/viewcontent/The_Long_Term_Effects_of_Cross_Listing.pdf
• Institution: Singapore Management University

We show that investor recognition and bonding associated with a U.S. cross-listing are distinct effects using a sample of Canadian firms. In contrast to the post-listing decline documented in the literature, we find that cross-listed firms with a single class of shares enjoy a permanent increase in valuation if they attract and maintain investor recognition over time. Valuations of firms that fail to widen their U.S. shareholder base return to pre-listing levels within two years. Cross-listed firms with dual-class shares exhibit a permanent increase in valuation regardless of the level of U.S. investor holdings, consistent with firm-level bonding.