Firm value and cross-listings: The impact of stock market prestige

Arbeitspapier

This study investigates the valuation impact of a firm's decision to cross-list on a more (or less) prestigious stock exchange relative to its own domestic market. We use network analysis to derive broad market-based measures of prestige for forty-five country or regional stock exchange destinations between 1990 and 2006. We find that firms crosslisting in a more prestigious market enjoy significant valuation gains over the five-year period following the listing. We also document a reverse effect for firms cross-listing in less prestigious markets: These firms experience a significant decline in valuation over the five years following the listing. The reputation of the cross-border listing destinations is therefore a useful signal of a firm's value going forward. Our findings are consistent with the view that cross-listing in a prestigious market enhances a firm's visibility, strengthens corporate governance, and lowers informational frictions and capital costs.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Staff Report ; No. 474

Classification and Topics

• Classification: Wirtschaft ; International Financial Markets ; Financial Institutions and Services: General
• Subject: Cross-listings ; network analysis

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Cetorelli, Nicola ; Peristiani, Stavros
• Event: Veröffentlichung
• (who): Federal Reserve Bank of New York
• (where): New York, NY
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/60906