Review of Cross-Listing

Review of Cross-Listing

Copyright: © 2014 |Pages: 69
DOI: 10.4018/978-1-4666-5047-3.ch003
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Abstract

The literature reviews presented in Chapter 3 summarize most of the research on the international cross-listing phenomenon. The chapter begins by reviewing early studies of cross-listing from the perspectives of cross-listing effects on return, risk, volatility, and cost of capital. This follows with an appraisal of the new wave of recent studies in terms of multiple listing, informed trading, cross-listing and corporate governance, and price disparity. Empirical studies of each of the research topics are also discussed.
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3.2 Early Studies Of Cross-Listing

The literature provides a set of theoretical foundations attempting to explain the motivations of a firm’s decision to list its stock on a foreign exchange, which are then followed by empirical investigations. The most frequently mentioned reasons for cross-listing include increasing security liquidity (Domowitz et al., 1998; Hargis, 2000), increasing visibility (Howe & Kelm, 1987), improving investor protection (Coffee, 2002), increasing stockholder base (Merton, 1987), providing diversification gains (Chan et al., 1992), and removing market segmentation effects (Kryzanowski & Zhang, 2002). Early research in the area of cross-listing postulated the economic benefits and different effects of cross-listing with compelling results.

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