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Board of Governors of the Federal Reserve System (U.S.)
International Finance Discussion Papers
Why do U.S. cross-listings matter?
John Ammer
Sara B. Holland
David C. Smith
Francis E. Warnock
Abstract

This paper investigates the underlying determinants of home bias using a comprehensive sample of U.S. investor holdings of foreign stocks. We document that U.S. cross-listings are economically important, as U.S. ownership in a foreign firm roughly doubles upon cross-listing in the United States. We explore the cross-sectional variation in this "cross-listing effect" and show that increases in U.S. investment are largest in firms from weak accounting backgrounds and in firms that are otherwise informationally opaque, indicating that U.S. investors value the improvements in disclosure associated with cross-listing. We confirm that relative equity valuations rise for cross-listed stocks, and provide evidence suggesting that valuation increases are due in part to increases in U.S. shareholder demand and in part to the fact that the equities become more attractive to non-U.S. shareholders.


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John Ammer & Sara B. Holland & David C. Smith & Francis E. Warnock, Why do U.S. cross-listings matter?, Board of Governors of the Federal Reserve System (U.S.), International Finance Discussion Papers 930, 2008.
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Keywords: Investments; Foreign ; Transparency ; Disclosure of information
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