Does Cross-Listing Signal Quality?
Journal of Contemporary Accounting and Economics, Forthcoming
Posted: 19 Nov 2006
The literature on cross-listing generally conveys the impression that cross-listing is good news about a firm. This paper focuses on returns following cross-listing where evidence of positive results from cross-listing is mixed. Considering 81 Australian firms, we find that cross-listed firms are less profitable with higher debt levels prior to cross-listing and that they achieve significant negative abnormal returns in the three years following cross-listing. This result holds even for firms seeking the benefits of "bonding" to US disclosure requirements by cross-listing in the more regulated US markets. Our study suggests cross-listing is not an unambiguous positive signal about a firm.
Keywords: cross-listing, long-run abnormal returns
JEL Classification: G39, G15, M41, M45
Suggested Citation: Suggested Citation