Does cross-listing in the US foster mergers and acquisitions and increase target shareholder wealth?

We examine the role of cross-listing in alleviating domestic market constraints and facilitating mergers and acquisitions. Our results show that cross-listing allows shareholders of target firms to extract higher takeover premiums relative to their non-cross-listed peers. Moreover, shareholders of Sarbanes–Oxley-compliant targets seem to benefit from a higher premium. We also find that cross-listed firms are more likely to be acquisition targets, consistent with the belief that cross-listing increases firms’ attractiveness and visibility on the market for corporate control. Our results are robust to various specifications and to the self-selection bias arising from the decision to cross-list.

► We examine the role of cross-listing in facilitating mergers and acquisitions. ► Cross-listed firms are more likely to be acquisition targets. ► Cross-listing allows target shareholders to extract higher takeover premiums. ► Shareholders of Sarbanes–Oxley-compliant targets benefit from higher premiums.