International Cross-Listing and the Bonding Hypothesis
The authors describe a new view of cross-listing that links the impact on firm valuation to the firm's ability to develop an active secondary market for its shares in the U.S. markets. Contrary to previous research, cross-listing may not provide benefits for all firms, even when those firms mee...
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2004
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sg-smu-ink.soa_research-18142018-07-13T06:08:04Z International Cross-Listing and the Bonding Hypothesis SEGAL, Dan King, Michael The authors describe a new view of cross-listing that links the impact on firm valuation to the firm's ability to develop an active secondary market for its shares in the U.S. markets. Contrary to previous research, cross-listing may not provide benefits for all firms, even when those firms meet the highest regulatory requirements for disclosure and supervision. When cross-listed firms are divided into two groups on the basis of their share turnover in the home market relative to the U.S. market, the firms that develop active trading in the U.S. market experience an increase in valuation. Cross-listed firms that remain predominantly traded in the home market following cross-listing are valued similarly to non-cross-listed firms. To gain the full benefits of crosslisting, a foreign firm must convince investors that their shareholder rights will be protected. The effectiveness of this reputational bonding is witnessed in the ratio of trading on the U.S. market relative to the home market. 2004-05-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/soa_research/815 https://ink.library.smu.edu.sg/context/soa_research/article/1814/viewcontent/SSRN_id555953.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Accountancy eng Institutional Knowledge at Singapore Management University Corporate Finance Portfolio and Security Analysis |
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Corporate Finance Portfolio and Security Analysis SEGAL, Dan King, Michael International Cross-Listing and the Bonding Hypothesis |
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The authors describe a new view of cross-listing that links the impact on firm valuation to the firm's ability to develop an active secondary market for its shares in the U.S. markets. Contrary to previous research, cross-listing may not provide benefits for all firms, even when those firms meet the highest regulatory requirements for disclosure and supervision. When cross-listed firms are divided into two groups on the basis of their share turnover in the home market relative to the U.S. market, the firms that develop active trading in the U.S. market experience an increase in valuation. Cross-listed firms that remain predominantly traded in the home market following cross-listing are valued similarly to non-cross-listed firms. To gain the full benefits of crosslisting, a foreign firm must convince investors that their shareholder rights will be protected. The effectiveness of this reputational bonding is witnessed in the ratio of trading on the U.S. market relative to the home market. |
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SEGAL, Dan King, Michael |
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SEGAL, Dan King, Michael |
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SEGAL, Dan |
title |
International Cross-Listing and the Bonding Hypothesis |
title_short |
International Cross-Listing and the Bonding Hypothesis |
title_full |
International Cross-Listing and the Bonding Hypothesis |
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International Cross-Listing and the Bonding Hypothesis |
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International Cross-Listing and the Bonding Hypothesis |
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international cross-listing and the bonding hypothesis |
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Institutional Knowledge at Singapore Management University |
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2004 |
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https://ink.library.smu.edu.sg/soa_research/815 https://ink.library.smu.edu.sg/context/soa_research/article/1814/viewcontent/SSRN_id555953.pdf |
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