Does Cross Listing Lead to Higher Firm Growth

Abstract

Extant research posits that cross-listing improves firms' access to lower cost external financing. But so far, there is scarce evidence that improved access to external funds through cross-listing contributes to higher firm growth. Documenting the relation between firm growth and cross-listing is critical because the presumption in prior research is that funds raised via cross-listing will be channeled towards potentially profitable projects. Using a sample of firms from 37 countries that are cross-listed in the U.S., we find a positive association between cross-listing and subsequent externally-financed firm growth rates. However, we do not find that increases in externally-financed firm growth after cross-listing vary systematically as a function of the home-country attributes of the cross-listed firms. Overall, our results provide new and direct evidence on the impact of cross-listing on firm growth rates.

Keywords: Cross Listing, External Financing, Cost of Capital, Firm Growth

JEL Classification: G15, G24, G31