We show that investor recognition and bonding associated with a U.S. cross-listing are distinct effects using a sample of Canadian firms. In contrast to the post-listing decline documented in the literature, we find that cross-listed firms with a single class of shares enjoy a permanent increase in valuation if they attract and maintain investor recognition over time. Valuations of firms that fail to widen their U.S. shareholder base return to pre-listing levels within two years. Cross-listed firms with dual-class shares exhibit a permanent increase in valuation regardless of the level of U.S. investor holdings, consistent with firm-level bonding.
Accounting | Corporate Finance
Financial Performance Analysis
Review of Financial Studies
Oxford University Press
SEGAL, Dan and King, Michael.
The long-term effects of cross-listing, investor recognition, and ownership structure on valuation. (2008). Review of Financial Studies. 22, (6), 2393-2421. Research Collection School Of Accountancy.
Available at: http://ink.library.smu.edu.sg/soa_research/803
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