The value of information in cross-listing |
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| Authors: | Arturo Bris Salvatore Cantale Emir Hrnji? George P Nishiotis |
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| Institution: | 1. IMD, Chemin de Bellerive 23, P.O. Box 915, CH-1001 Lausanne, Switzerland;2. NUS Business School, National University of Singapore, 119245, Singapore;3. Department of Public and Business Administration, University of Cyprus, P.O. Box 20537, CY-1678 Nicosia, Cyprus;1. Department of Finance, Cleveland State University, Cleveland, OH 44115-2214, United States;2. Quantitative Risk Analysis Group, KeyBank, Cleveland, OH 44114-1306, United States;1. Faculty of Science Economics and Management of Tunis, El Manar II, Tunis 2092, Tunisia;2. Higher Institute ofManagement of Tunis, Bardo, Tunis2000, Tunisia;1. Department of Economics, Tufts University, USA;2. USAID, Washington, DC, USA;3. Department of Economics, FEA-USP, Brazil;1. Faculty of Science Economics and Management of Tunis (FSEG Tunis) University of Tunis El Manar, Tunisia;2. Higher Institute of Management of Tunis (ISG Tunis), Bardo 2000 Tunis, Tunisia |
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| Abstract: | Until 2004, the London Stock Exchange allowed firms to be traded in the specialized SEAQ-I platform without the firm's involvement. Trading only required an application by one LSE trading member firm. Such an institutional arrangement, which made cross-listings possible without a firms' approval, allows for a direct test of different theories of foreign listing. In particular, we can differentiate between market segmentation and liquidity hypotheses, which rely on a firm trading in a foreign exchange and informational hypotheses, which assume that a firm makes the decision to trade in a foreign exchange. We identify a sample of international firms that are admitted to trading on London's SEAQ-I platform without their involvement. We estimate the valuation effects of this multi-market trading event and compare them to those enjoyed by firms that pursue a standard London Stock Exchange cross-listing. A cross-sectional abnormal returns analysis documents significant evidence in support of information-related hypotheses of cross-listing. An analysis of the firms' home market price volatility corroborates the results. |
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