The effect of additional foreign market presence on the trading volume of cross-listed/traded stocks

• Additional cross-listing/trading increases trading volume.
• The cross-trading effect is the most important for high orders of foreign presences.
• Trading costs and arbitrage opportunities explain the change in trading volume.
• Firm size and proximity preference also explain the change in trading volume.

This paper aims to address an unanswered question about the effect of additional foreign market presence on the trading volume of cross-listed/traded firms. Using a unique and comprehensive sample of 235 firms with 788 foreign listings/tradings over the period 1980–2013, we find that compared with the decrease in trading volume after the first cross-listing, additional foreign listing/trading results in more shares traded on the stock. Results also show that the effect of additional cross-trading is more important than additional cross-listing for high orders of foreign presences. We find that the increase in trading volume is negatively related to trading costs and positively to arbitrage opportunities. We also find that proximity preference and firm size play significant effects that depend on the order of cross-listing/trading.