Firm value and cross-listings: the impact of stock market prestige

Nicola Cetorelli and Stavros Peristiani ()

No 474, Staff Reports from Federal Reserve Bank of New York

Abstract: This study investigates the valuation impact of a firm?s decision to cross-list on a more (or less) prestigious stock exchange relative to its own domestic market. We use network analysis to derive broad market-based measures of prestige for forty-five country or regional stock exchange destinations between 1990 and 2006. We find that firms cross-listing in a more prestigious market enjoy significant valuation gains over the five-year period following the listing. We also document a reverse effect for firms cross-listing in less prestigious markets: These firms experience a significant decline in valuation over the five years following the listing. The reputation of the cross-border listing destinations is therefore a useful signal of a firm?s value going forward. Our findings are consistent with the view that cross-listing in a prestigious market enhances a firm?s visibility, strengthens corporate governance, and lowers informational frictions and capital costs.

Keywords: Stock exchanges; Corporate governance; Corporate profits; Stock - Prices (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-fmk
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Citations: View citations in EconPapers (5)

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Journal Article: Firm Value and Cross Listings: The Impact of Stock Market Prestige (2015)
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