Cross-listing and value creation

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.