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Is there a Cross Listing Premium for Non-Exchange Traded Depositary Receipts?

O'Connor, Thomas .G. (2009) Is there a Cross Listing Premium for Non-Exchange Traded Depositary Receipts? International Research Journal of Finance and Economics (25). pp. 183-202. ISSN 1450-2887

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Abstract

In this paper, I examine the valuation effects of trading in the U.S. as non-exchange issues i.e. Level 1 and 144 firms for non-U.S. firms. The study is motivated by two facts; first, while the number of new Level 2/3 issues has fallen 2001, Level 1 issues have remained an attractive listing option for non-U.S. firms. Second, while on theoretical grounds, firms from low-disclosure regimes have most to gain from exchange listing; these firms tend to list in the U.S. as non-exchange issues. Here, I examine whether the continuing attractiveness of, and the tendency of firms to choose a Level 1/144a listing is value enhancing. My results suggest that the tendency on the part of firms from lowdisclosure regimes to choose non-exchange issues is justified. Relative to their highdisclosure peers, these firms tend to gain most from trading in the U.S. However, for Rule 144a issues, the valuation gains are short-lived.

Item Type: Article
Additional Information: The author would like to acknowledge the receipt of financial support from the Maynooth Finance Research Group (MFRG). The paper has benefited from helpful comments from Thomas Flavin, and from two anonymous referees. Any remaining errors are entirely my own.
Keywords: Cross listing; Level 1; Rule 144a; Tobin’s q;
Subjects: Social Sciences > Economics
Item ID: 2501
Depositing User: IR Editor
Date Deposited: 19 Apr 2011 15:38
Journal or Publication Title: International Research Journal of Finance and Economics
Publisher: European Journals, Inc.
Refereed: Yes
URI:

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