Realized benefits from foreign listings

Abstract

This study examines a sample of U.S. companies that listed their equity securities on a foreign exchange. Perceived benefits from the foreign listing, as reported by management, are summarized. Company performance surrounding the listing is analyzed using both stock market and accounting measures to determine whether the anticipated benefits are consistently realized. The stock price reaction within a short window surrounding the initial public announcement of the foreign listing is not significantly different from zero. However, some evidence is documented that indicates the net benefits from listing internationally is positive. Cross-sectional analyses provide evidence consistent with the notion that the market's reaction to the listing event is positively related to liquidity gains derived from the listing and the firm's ability to expand operations within the foreign market. This evidence implies that the ultimate benefits received from the foreign listing depend on the position of the firm and its ability to capitalize on market conditions.