O'Connor, Thomas G.
The Valuation Effects of Cross-Listing Abroad for Irish Firms.
Irish Accounting Review, 16 (1).
The number of Irish firms cross-listed on international exchanges remains low,
relative to other countries. However, as a proportion of those firms eligible to
list, Irish firms are, relative to others, more likely to list abroad. Surprisingly,
Doidge, Karolyi and Stulz (2004) show that in 1997 US exchange-traded Irish
firms are worth less than domestic Irish firms, a result at odds with what we
might have expected and with the predictions of the legal bonding hypothesis.
In this paper, I show that listing abroad, in both London (AIM listing only)
and the US (both Level 1 and Level 2), does enhance the value of lrish firms. I
find that cross-listing leads to an average 'within-firm' change in the value of
Level 2 firms in the region of 19.65 per cent (using market-to-book of assets).
As expected, the change in value experienced by Level 1 firms is smaller (14.93
per cent). Like Doidge, Karolyi and Stulz (2009), 1 do not find that an ordinary
listing in London enhances value. Surprisingly, I find that Irish firms that
trade on the Alternative Investment Market (AIM) in London experience the
largest valuation gains from listing abroad of all cross-listed Irish firms (27.35
per cent using market-to-book of assets). This is surprising since these firms
are subjected to the least onerous governance and regulatory requirements of
all cross-listed Irish firms. Ultimately, due to data restrictions, I am unable to
delve further into why the less regulated AIM firms enjoy a larger cross-listing
premium relative to Level 2 firms. However, I offer some possible explanations
consistent with some findings in the international cross-listing literature.
||Valuation; Cross-Listing; Irish Firms; Ireland;
||Faculty of Social Sciences > Economics, Finance and Accounting
||19 Jan 2012 12:57
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||Irish Accounting Review
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