Why are U.S. firms listed in foreign markets worth more?

Sergei Sarkissian and Michael Schill

MPRA Paper from University Library of Munich, Germany

Abstract: An expanding literature asserts that non-U.S. firms achieve a value premium for listing on U.S. equity markets. In this paper we examine the foreign listing premium across a global sample of home and host markets, including U.S. firms that list on non-U.S. stock exchanges. We find that the value premium of U.S. firms that list abroad is similar to that of non-U.S. firms that list on U.S. exchanges, and that many other home and host markets manifest a foreign listing premium. The cross-sectional variation in the value premium appears to have little association with any unique institutional feature of the market; rather it is related to variation in pre-listing valuation ratios. We establish that the foreign listing premium disappears once we control for the firm’s pre-listing valuation ratio.

Keywords: Cross listings; Firm valuation; Rule of law; Stock exchanges; Tobin’s Q (search for similar items in EconPapers)
JEL-codes: G15 G32 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-ifn
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Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/28653/3/MPRA_paper_28653.pdf revised version (application/pdf)

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