Cross-listing decisions and the foreign bias of investors

Olga Dodd and Bart Frijns

Finance Research Letters, 2015, vol. 15, issue C, 160-166

Abstract: We show that two major puzzles in financial economics, the home bias puzzle in international equity allocations and the choice of destination market for cross-listing, are related. In particular, the level of cross-listing activity from the home market to a foreign market is strongly positively related to the degree of over-/under-investment of the home market investors in that particular foreign market, after controlling for other potential explanations of cross-listing decisions. This finding suggests that corporate managers, when making a cross-listing decision, may be prone to the same behavioral/familiarity bias as investors, and both puzzles may in fact be the same.

Keywords: Foreign bias; Cross-listing; Familiarity bias (search for similar items in EconPapers)
JEL-codes: F23 G11 G15 G32 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:15:y:2015:i:c:p:160-166

DOI: 10.1016/j.frl.2015.09.006

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