Abstract
In the year 2000, the Israeli Securities Authority (ISA) initiated a new amendment to the Securities Law aimed at promoting dual listing of Israeli companies, already traded in the US, and not in Israel, by exempting them from the burden of additional reporting to the ISA. According to this amendment, the ISA agreed to rely solely on the reporting requirements of the US SEC. Since then, more than 30 Israeli companies, traded on Nasdaq decided to list their shares on the TASE as well. This event allows us to examine the effect dual listing had on share prices and liquidity in a unique setup that annuls the costs of dual listing registration. The main findings are as follows: 1) trade volume of the dual listed companies has grown by about 123% on; 2) about 42% of the total volume is on the TASE without adversely affect the trading volume on the Nasdaq; 3) as a result, share prices went up by about 9. One possible policy implication of these findings is the positive influence harmonized supervision may have over international capital markets such as the Single Passport in Europe.
Highlights
In the year 2000, a ‘Dual-Listing Law’ was amended to the Securities Law with the intent of promoting dual listing on the Tel Aviv Stock Exchange (TASE)
We argue that the positive effect we find is due to the absence of registration costs for dual listings and that in such case there is a clear benefit to dual listing, mainly due to increased liquidity
This paper examines the influence of an amendment to the Securities Law, legislated in 2000, designed to encourage dual listing of Israeli companies, both in Israel and the US, by exempting them from the burden of additional reporting to ISA
Summary
In the year 2000, a ‘Dual-Listing Law’ was amended to the Securities Law with the intent of promoting dual listing on the Tel Aviv Stock Exchange (TASE). The amended law exempts firms already traded in the US from the burden of reporting to the ISA (Israeli SEC) in addition to the US reporting requirements.. The amended law exempts firms already traded in the US from the burden of reporting to the ISA (Israeli SEC) in addition to the US reporting requirements.1 Following this amendment more than 30 Israeli companies, traded on NASDAQ, decided to dual list their shares on the TASE. This unique event allows us to examine the effect dual listing has on share prices and liquidity, in almost laboratory conditions given that the new “dual-listing law” annuls registration costs and other regulatory costs typical to multiple listing in foreign countries. Contrary to previous studies examining this issue, the costs of dual listing these companies on the TASE are negligible since the listing requires only a notification to the TASE and ISA and does not require prospectus and additional reporting to them beyond those required in the US
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