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Cross-listing and value creation

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  • Ghadhab, Imen
  • Hellara, Slaheddine

Abstract

This paper examines the effect of cross-listing and additional cross-listing on firm value for a unique and comprehensive sample of firms listed abroad. Using an event study methodology, we show that, while additional cross-listing has a diminishing effect on firm value, generally the three first listings abroad result in positive price reaction. Our results also show that US exchanges are more conductive to value creation for the post-listing period, while UK exchanges play a greater role for the pre-listing period. We also find, in a multivariate regression analysis that traditional explanations for value creation after cross-listing, related essentially to legal environment and proximity preference, are not significant. Our results provide new empirical evidence showing that the improvement in stock price informativeness around cross-listing is the most responsible for valuation gain.

Suggested Citation

  • Ghadhab, Imen & Hellara, Slaheddine, 2016. "Cross-listing and value creation," Journal of Multinational Financial Management, Elsevier, vol. 37, pages 1-11.
    • Handle: RePEc:eee:mulfin:v:37-38:y:2016:i::p:1-11
    DOI: 10.1016/j.mulfin.2016.08.001
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    Cited by:

    1. Imen Ghadhab, 2023. "Bonding, signaling theory and dividend policy: Evidence from multinational firms," Journal of Asset Management, Palgrave Macmillan, vol. 24(1), pages 69-83, February.
    2. Ghadhab, Imen & M’rad, Mouna, 2018. "Does US cross-listing come with incremental benefit for already UK cross-listed firms," The Quarterly Review of Economics and Finance, Elsevier, vol. 69(C), pages 188-204.
    3. Jones, Edward & Kwansa, Nana Abena & Li, Hao, 2020. "How does internationalization affect capital raising decisions? Evidence from UK firms," Journal of Multinational Financial Management, Elsevier, vol. 57.
    4. Awadh Saeed Bin-Dohry & Hanita Kadir Shahar & Sharmilawati Sabki, 2023. "Destination choice of the dual listing decision: The case ASEAN-5 firms," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(2), pages 2233773-223, June.
    5. Ghadhab, Imen, 2021. "Cross-listing and the alignment between short and long-run performance," Journal of Multinational Financial Management, Elsevier, vol. 62(C).
    6. Yang, Ann Shawing & Carandang, Craig Alan Uyan, 2017. "Exploring the location and price differentials of cross-listed firms for arbitrage opportunities," Finance Research Letters, Elsevier, vol. 21(C), pages 85-91.
    7. Imen Ghadhab, 2021. "Cross-listing and crisis," Journal of Asset Management, Palgrave Macmillan, vol. 22(7), pages 539-558, December.

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    More about this item

    Keywords

    Cross-listing; Firm value; Event study; Price informativeness;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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