Cross-Listing, Investment Sensitivity to Stock Price, and the Learning Hypothesis

Thierry Foucault and Laurent Frésard

The Review of Financial Studies, 2012, vol. 25, issue 11, 3305-3350

Abstract: Cross-listed firms in the United States have a higher investment-to-price sensitivity than do firms that never cross-list. This difference is strong, does not exist prior to the cross-listing date, and does not vanish afterward. Moreover, it does not appear to be primarily driven by improvements in governance, disclosure, and access to capital associated with a U.S. cross-listing. Instead, we argue that a cross-listing enhances managers' reliance on stock prices because it makes stock prices more informative to them. Consistent with this explanation, U.S. cross-listings that are more likely to strengthen the informativeness of stock prices for managers feature a higher investment-to-price sensitivity. The Author 2012. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com., Oxford University Press.

Date: 2012
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Related works:
Working Paper: Cross-Listing, Investment Sensitivity to Stock Price and the Learning Hypothesis (2012)
Working Paper: Cross-Listing, Investment Sensitivity to Stock Price and the Learning Hypothesis (2011)
Working Paper: Cross listing investment sensitivity to stock price and the learning hypothetis (2011)
Working Paper: Cross listing investment sensitivity to stock price and the learning hypothetis (2011)
Working Paper: Cross listing investment sensitivity to stock price and the learning hypothetis (2011)
Working Paper: Cross listing investment sensitivity to stock price and the learning hypothetis (2011)
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