The Long-Term Effects of Cross-Listing, Investor Recognition, and Ownership Structure on Valuation

By Michael R. King, D. Segal. 2006

161 citations recorded by the source corpus.

The widening of a foreign firm's U.S. investor base and the improved information environment associated with cross-listing on a U.S. exchange are distinct effects. Valuations of Canadian firms peak in the year of cross-listing and fall monotonically thereafter, irregardless of the level of U.S. investor holdings or the ownership structure of the firm. Cross-listed firms with a 20%+ blockholder attract a similar number of U.S. institutional investors as widely-held firms on average, but experience a lower increase in valuation at high levels of investor recognition. While U.S. investors are less willing to invest in firms with dual-class shares, these firms benefit more from cross-listing even when they fail to widen their U.S. investor base, suggesting that the reduction in information asymmetry between controlling and minority investors has a separate impact on valuation for firms where agency problems are greatest.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/e80bdae7a1498a293a38896f5c62bcc419b00039

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