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On the Fortunes of Stock Exchanges and Their Reversals
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On the Fortunes of Stock Exchanges and Their Reversals

Evidence from Foreign Listings

Mariassunta Giannetti
ECB, 2013
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Editorial Rating

7

Qualities

  • Analytical
  • Innovative
  • Background

Recommendation

As capital flows around the globe, it has become simpler for investors to buy securities in almost any of the world’s stock exchanges. This raises the question of why companies continue to seek secondary listings outside their home countries. Finance professors Nuno Fernandes and Mariassunta Giannetti undertook a broad study that offers some new insights into why and where firms cross-list their shares, and what roles governance rules and investor protection play in those choices. Their paper is rigorously academic in tone, and getAbstract recommends it to executives, regulators and policy makers with an advanced technical interest in the topic.

Summary

Firms seek to tap global capital flows by offering, or cross-listing, their shares on foreign stock exchanges. In total, some 10% of companies maintain cross-listings outside their home markets. Prior research into these secondary share listings has focused on foreign firms seeking US listings, but a sample of 3,643 companies from more than 80 countries, along with their more than 5,000 cross-listings on 29 exchanges in 24 countries from 1980 to 2006, allows for a more comprehensive analysis of cross-listing behavior.

The only truly...

About the Author

Nuno Fernandes is a professor of finance at the International Institute for Management Development in Lausanne, Switzerland. Mariassunta Giannetti is a professor of finance at the Stockholm School of Economics.

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