The Long-Term Effects of Cross-Listing, Investor Recognition, and Ownership Structure on Valuation

Michael King and Dan Segal

The Review of Financial Studies, 2009, vol. 22, issue 6, 2393-2421

Abstract: We show that investor recognition and bonding associated with a U.S. cross-listing are distinct effects using a sample of Canadian firms. In contrast to the post-listing decline documented in the literature, we find that cross-listed firms with a single class of shares enjoy a permanent increase in valuation if they attract and maintain investor recognition over time. Valuations of firms that fail to widen their U.S. shareholder base return to pre-listing levels within two years. Cross-listed firms with dual-class shares exhibit a permanent increase in valuation regardless of the level of U.S. investor holdings, consistent with firm-level bonding. The Author 2008. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org., Oxford University Press.

Date: 2009
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Working Paper: The Long-Term Effects of Cross-Listing Investor Recognition, and Ownership Structure on Valuation (2006)
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