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Firm Value and Cross Listings: The Impact of Stock Market Prestige

Nicola Cetorelli () and Stavros Peristiani ()

Journal of Risk and Financial Management, 2015, vol. 8, issue 1, 1-31

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 a network analysis methodology to derive broad market-based measures of prestige for 45 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. In contrast, firms cross listing in less prestigious markets experience a significant valuation discount over this post-listing period. The reputation of the cross-border listing destinations is therefore a useful signal of firm value going forward. Our findings are consistent with the view that cross listing in a prestigious market enhances firm visibility, strengthens corporate governance, and lowers informational frictions and capital costs.

Keywords: cross-listings; network analysis (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2015
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Working Paper: Firm value and cross-listings: the impact of stock market prestige (2010) Downloads
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