Abstract
This study examines post-listing equity price performance of foreign firms which cross-listed sponsored American Depository Receipts (ADRs) on the New York and the American Stock Exchanges during the period 1982-1992. We use three valuation metrics – price-to-book, price-to-cash-earnings, and price-to-earnings – which are adjusted for the home country and world industry indices to which the listing firm's stock belongs. We find positive valuation effects associated with cross-listing for both country-benchmarked and industry-benchmarked price ratios. Variables that proxy for home country characteristics such as governance styles, disclosure quality, market liquidity, and so forth are unable to explain the cross-sectional variation in the data. Our results thus suggest that cross-listing in the U.S. enhances valuations for listing firms by simply reducing the overall effect of segmentation among different national securities markets.
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*Anant Sundaram (Ph.D., Yale University) is Visiting Associate Professor of International Business at the University of Michigan Business School, and Associate Professor of Business Administration at the Amos Tuck School, Dartmouth College. His current research focuses on empirical analysis of international trade agreements and strategic trade, and on comparative corporate governance issues.
**Dennis Logue (Ph.D., Cornell University) is the Steven Roth Professor of Management at the Amos Tuck School, Dartmouth College. His current research focuses on privatization, and on the governance and internal organization implications of different types of financial claims.
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Sundaram, A., Logue, D. Valuation Effects of Foreign Company Listings on U.S. Exchanges. J Int Bus Stud 27, 67–88 (1996). https://doi.org/10.1057/palgrave.jibs.8490127
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DOI: https://doi.org/10.1057/palgrave.jibs.8490127