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International Listings of Stocks: The Case of Canada and the U.S

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  • Stephen R Foerster

    (The University of Western Ontario)

  • G Andrew Karolyi

    (The Ohio State University)

Abstract

The globalization of financial markets has seen ever-increasing numbers of firms choosing to list their stocks on foreign exchanges. We examine whether the extent of economic and financial market integration (or segmentation) between a firm's home country and listing country influences stock price reaction by examining the case of two “similar” countries: the U.S. and Canada. During the 100 days before the week of interlisting in the U.S., (risk-adjusted) stock prices of Canadian firms rise (on average) by over 9.4%, rise by an additional 2% around the interlisting date, but follow with a corresponding drop of 9.7% in the 100 days after interlisting. We interpret this evidence to be consistent with the financial market segmentation between Canada and the U.S. However, a subsample of Canadian resource firms does not exhibit these stock price effects, suggesting industry-related factors may also be an important determinant of integration. We also find average trading volume in interlisted stocks more than doubles in the months following interlisting.© 1993 JIBS. Journal of International Business Studies (1993) 24, 763–784

Suggested Citation

  • Stephen R Foerster & G Andrew Karolyi, 1993. "International Listings of Stocks: The Case of Canada and the U.S," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 24(4), pages 763-784, December.
    • Handle: RePEc:pal:jintbs:v:24:y:1993:i:4:p:763-784
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