O'Connor, Thomas G.
(2009)
The Valuation Effects of Cross-Listing Abroad
for Irish Firms.
The Irish Accounting Review, 16 (1).
pp. 55-87.
ISSN 0791-9638
Abstract
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 Irish 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), I 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 AIMfirms 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.
| Item Type: |
Article
|
| Keywords: |
Valuation Effects; Cross-Listing; Abroad; Irish Firms; |
| Academic Unit: |
Faculty of Social Sciences > Economics, Finance and Accounting |
| Item ID: |
8499 |
| Depositing User: |
Thomas G. O'Connor
|
| Date Deposited: |
25 Jul 2017 11:34 |
| Journal or Publication Title: |
The Irish Accounting Review |
| Publisher: |
Stanford University Libraries |
| Refereed: |
Yes |
| URI: |
|
| Use Licence: |
This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available
here |
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