Where is the Market? Evidence from Cross-Listings

Marco Pagano, Josef Zechner, Otto Randl and Michael Halling

No 4987, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We investigate the distribution of trading volume across different venues after a company lists abroad. In most cases, after an initial blip, foreign trading declines rapidly to extremely low levels. However, there is considerable cross-sectional variation in the persistence and magnitude of foreign trading. The ratio between foreign and domestic trading volume is higher for smaller, more export and high-tech oriented companies. It is also higher for companies that cross-list on markets with lower trading costs and better insider trading protection. Foreign trading is high close to the cross-listing date but decreases dramatically in the subsequent six months. This accords with the ?flow-back hypothesis? that declining foreign trading is associated with the gravitational pull of the home market.

Keywords: Trading volume; Cross-listing; Flow-back (search for similar items in EconPapers)
JEL-codes: G15 G30 (search for similar items in EconPapers)
Date: 2005-04
New Economics Papers: this item is included in nep-fin and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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