Companies cross list on multiple stock exchanges. We know this. Why do some companies crosslist on multiple exchanges however? This paper tries to get to the bottom of this. It has been published in Global Finance Journal.
“In this study, we examine the multiple direct foreign-listing by analyzing characteristics of listing ﬁrms as well as hosting and home countries. Our results show that listing premium increases over time, but this premium diminishes as the ﬁrm lists in additional foreign markets. Multiple listing is closely related to the ﬁrm’s ability to list, but does not translate into better future or higher returns. Additionally, we ﬁnd no evidence to support the bonding hypothesis. We conclude that ﬁrms list in additional foreign countries to take advantage of higher valuation to raise capital more cheaply, rather than to beneﬁt from a better legal environment.”