Trading company shares at multiple stock exchanges. Costs and Benefits of U.S. cross-listings

Bachelor Thesis , 2015 , 24 Pages , Grade: 96/110

Business economics - Investment and Finance

This thesis project aims to test the hypothesis whether or not there exists enough empirical evidence to prove that companies from developed countries with well-functioning capital markets have seen deteriorating benefits from cross-listing in the United States.

We find evidence that support our hypothesis in light of the significant number of European companies terminat-ing their U.S. cross-listings after requirements for deregistering listings from the U.S. became less stringent in the year 2007. The trend also continued with the number of cross-listings by companies from the developed world steadily declining during the subsequent five years. The most cited reasons for cross-listing in the United States, such as greater access to investors, liquidity, a higher valuation and thus a lower cost of capital seems not to hold as strongly anymore.

At least not for companies that come from countries where its capital markets have experienced a steady development in corporate governance standards so as to match that of the United States. Evidence point to the fact that the benefits that held for all non U.S. firms still hold strongly only for those companies coming from emerging economies and whose equity market standards are still well below that of stock exchanges in the United States.

Table of Contents

1. Introduction
1.1 Hypothesis
1.2 Outline of the paper
1.3 Definition
1.4 Reasons to cross-list
1.4.1The bonding hypothesis
1.4.2 The market segmentation hypothesis
1.4.3. Investor Recognition Hypothesis
1.4.4. The liquidity hypothesis

2. Method

3. Description

4. Summary

5. Conclusion

Bibliography

• Course: Principles of International Finance
• Grade: 96/110
• Author: Laura Kalinska (Author)
• Publication Year: 2015
• Pages: 24
• Catalog Number: V321290
• ISBN (eBook): 9783668214019
• ISBN (Book): 9783668214026
• Language: English
• Tags: trading, costs, benefits