Does cross-listing in the US mitigate stock crash risk? International evidence

Imen Ghadhab

International Review of Financial Analysis, 2019, vol. 63, issue C, 186-197

Abstract: This paper investigates the role of US cross-listing in mitigating stock crash risk. By using an appropriate approach dealing with the endogeneity of the cross-listing decision, we find that cross-listing mitigates crash risk. By disentangling the effect of cross-listing from either increased disclosure/investor protection rules or reduced market segmentation, we find that cross-listing on the OTC unregulated market play a more significant role compared to the cross-listing on the regulated exchanges. Additional analysis shows that the role of cross- listing in mitigating crash risk is more important when local governance and disclosure standards are low. The results support the notion that the mitigating role of cross-listing is not driven by the commitment to high legal and disclosure environment in the US exchanges. Furthermore, results are robust after controlling for several factors identified by earlier literature as determinants of stock crash risk.

Keywords: Cross-listing; Stock crash; Legal bonding; Information disclosure (search for similar items in EconPapers)
JEL-codes: G1 G3 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:63:y:2019:i:c:p:186-197

DOI: 10.1016/j.irfa.2019.04.007

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