Bonding to the Improved Disclosure Environment in the US: Firms' Listing Choices and their Capital Market Consequences |
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Institution: | 1. Department of Economics, Kent State University, OH, USA;2. School of Business, University of Western Sydney, NSW, Australia;1. Interdisciplinary Center Herzliya, Kanfe Nesharim St., Herzliya 46150, Israel;2. UCLA Anderson School of Management, 110 Westwood Plaza, D513, Los Angeles, CA 90095, United States;3. University of Michigan, 701 Tappan St., Ann Arbor, MI 48109, United States;4. University of Arkansas, 220N. McIlroy Ave., Fayetteville, AR 72701, United States |
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Abstract: | We examine whether current disclosure requirements affect foreign firms' decisions to list on a US exchange. We document that (1) while firms from a weak disclosure environment are more likely to cross-list and either trade OTC or be placed privately, they are less likely to list on an exchange in which firms are required to comply with US GAAP, (2) exchange-listing firms receive a higher valuation than non-exchange-listing firms, and (3) exchange-listing firms domiciled in a higher disclosure regime, who incur lower costs of US GAAP compliance, generally receive a higher valuation than exchange-listing firms from a lower disclosure regime. |
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