International cross-listing and stock market development in emerging economies |
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| Institution: | 1. UAE University, College of Business & Economics, United Arab Emirates;2. College of Business Administration, King Saud University, Saudi Arabia;3. Department of Finance, Audit and Accounting Champagne School of Management (Groupe ESC Troyes), France IRG, Université Paris Est Créteil, France;1. School of Insurance and Economics, University of International Business and Economics, No. 10, Huixindongjie Rd., Chaoyang District, Beijing 100029, PR China;2. Department of Finance, National Central University, No. 300, Zhongda Rd., Zhongli District, Taoyuan City 32001, Taiwan;3. Department of Finance, National Taiwan University, No. 1, Sec. 4, Roosevelt Rd., Taipei 10617, Taiwan;4. Risk and Insurance Research Center, National Chengchi University, NO.64, Sec.2, ZhiNan Rd., Wenshan District, Taipei 11605, Taiwan;5. Center for Research in Econometric Theory and Applications, National Taiwan University, No. 1, Sec. 4, Roosevelt Rd., Taipei 10617, Taiwan;6. School of Insurance and Economics, University of International Business and Economics, No. 10, Huixindongjie Rd., Chaoyang District, Beijing 100029, PR China;1. Laboratory Research for Economy, Management and Quantitative Finance, Institute of High Commercial Studies, University of Sousse, Tunisia;2. Institute of High Commercial Studies, University of Sousse, Tunisia;1. School of Finance, Guangdong University of Foreign Studies;2. Southern China Institute of Fortune Management Research, Guangdong University of Foreign Studies;3. School of Economics and Finance, South China University of Technology |
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| Abstract: | Why have emerging equity markets grown so rapidly since 1990? First, it is shown how international cross-listings can transform a segmented local equity market from an equilibrium of low liquidity and market capitalization to an integrated market with high liquidity and market capitalization by altering the incentives of companies and individuals to participate in the market. Second, benefits of international cross-listings for domestic stock market development and welfare across emerging equity markets are found to be negatively related to both the degree of correlation between the domestic and world equity market and the relative size of the domestic equity market. Third, the price impact of international listing is shown to depend on the liquidity conditions in the domestic market prior to listing. |
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