Japanese Management Views on Overseas Exchange Listings: Survey Results

Although many theoretical papers support the hypothesis that overseas listings have a positive effect on stockholders' wealth, a few empirical studies cast doubts on this hypothesis. These studies suggest that the steady growth of overseas listings is motivated not only by the stockholders' wealth maximization, but also by other reasons, such as managers' utility maximization. However, information about management views on overseas listings is as yet inadequate to support or contradict this hypothesis. Following Baker and Pettit (1982) and Baker and Johnson (1990), both of which examined management's motives for domestic exchange listing, we used a questionnaire to obtain information on Japanese managers' views of their company's decision to list overseas. Our survey, mailed to the chief financial officers of 2,230 Japanese domestically-listed companies, shows that Japanese managers regard disclosure and financial reporting requirements as the primary obstacle to listing overseas. This is why many Japanese companies do not list their stocks on overseas stock exchanges despite the fact that they acknowledge the beneficial effects of overseas listings.