Ownership, Foreign Listings, and Market Valuation

Aditya Kaul, Vikas Mehrotra and Blake Phillips

No 2005-13, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: We study changes in U.S. institutional ownership and its effects for 83 new listings of Canadian equities on U.S. exchanges. While institutional holdings increase starting four quarters before cross-listing, there is a pronounced spike in the listing quarter. This is consistent with foreign listing being essential to attract major foreign investors. Sorting stocks on the change in institutional ownership associated with cross-listing, we find that stocks with the largest increase in ownership experience (a) permanent increases in their prices; (b) the largest increase in comovement with the U.S. equity index; and (c) the largest increase in local liquidity. These results suggest that ownership plays a critical part in driving price and liquidity changes around cross-listings and in inducing comovement with local stocks.

Pages: 37 pages
Date: 2006-03
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitcei:2005-13

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