Cross-Listing, Information Environment, and Market Value: Evidence from U.S. Firms that List on Foreign Stock Exchanges

• Published in: Journal of international accounting research Vol. 7; no. 2; pp. 25 - 41
• Main Authors: Eng, Li Li, Nabar, Sandeep, Mian, G. Mujtaba
• Format: Journal Article
• Language: English
• Published: Sarasota American Accounting Association 01.01.2008
• Subjects: Accounting; Accuracy; Analysts; Cross-sectional studies; Forecasting; International finance; Investments; New stock market listings; Research design; Securities analysis; Stock exchanges; Studies; Valuation; United States > US
• ISSN: 1542-6297; 1558-8025
• DOI: 10.2308/jiar.2008.7.2.25

This paper examines how cross-listing impacts analyst coverage and forecast accuracy for U.S. firms that cross-list on foreign exchanges. By focusing on U.S. firms cross-listing abroad, we are able to discriminate between two competing explanations for the improvements in information intermediation experienced by foreign firms cross-listing in the U.S. (Lang, Lins, and Miller 2003); that is, whether the improvements are driven by generic cross-listing effects or by the strict disclosure and regulatory requirements specific to the U.S. markets. Our cross-sectional analysis indicates that cross-listing is negatively associated with analyst coverage, and our time-series analysis yields only marginal evidence of post-cross-listing improvement in forecast accuracy. Thus the cross-listing benefits documented in prior research for foreign firms cross-listing in the U.S. are not generalizable to all cross-listings and may be attributable to the strong disclosure and regulatory environment prevalent in the United States.