Stock Price Informativeness, Cross-Listings and Investment DecisionsThierry Foucault and Thomas Gehrig Post-Print from HAL Abstract: We show that a cross-listing allows a firm to make better investment decisions becauseit enhances stock price informativeness. This theory of cross-listings yields several predictions.In particular, it implies that the sensitivity of investment to stock prices should belarger for cross-listed firms. Moreover, the increase in value generated by a cross-listing(the "cross-listing premium") should be positively related to the size of growth opportunitiesand negatively related to the quality of managerial information. We also analyze theeffects of the geography of ownership (the distribution of holdings between foreign and domesticinvestors) on the cross-listing premium. In particular, we show that the sensitivityof the cross-listing premium to the size of growth opportunities increases when holdings(resp. market shares) become more evenly distributed between foreign and domestic investors(resp. markets). Last, we show that concentration of trading in the home market("flow-back") can indeed increase the cross-listing premium for some firms. Keywords: Cross-listings; cross-listings premium; price informativeness; investment decisions; flow-back; ownership (search for similar items in EconPapers) Published in 2006 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00125690 Access Statistics for this paper More papers in Post-Print from HAL |
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