The Impact of Cross-Listing on the Corporate Information Environment: Further Evidence
30 Pages Posted: 15 Feb 2010
Date Written: February 11, 2010
Abstract
We explore the impact of cross-listing on the information environment of publicly traded companies. Compared to non-cross-listed companies, we find that cross-listed firms already have higher levels of information dissemination, as measured by the number of analyst, which increase after cross-listing. However, this increase does not continue after the third year of the post-cross listing period; this short period year-to-year increase in analyst following is robust for AMEX, NASDAQ, NYSE, LSE, and OTC, but not for PORTAL. Meanwhile, there is no change in the quantity of this information, as measured by analysts’ earnings forecasts, compared to non–cross-listed firms. Nonetheless, we find that the precision of analysts’ earnings forecasts increases during the first year prior to the cross-listing year, which provides cross-listed firms with an advantage over their non-cross-listed counterparts. The results are the same for all exchanges, except for OTC. Different from Lang et al. (2003), our results suggest that the event of cross-listing per see is what matters to firms, and not their commitment to increase the level of information disclosure. We are the first to produce such evidence, which contributes to the current debate on cross-listing, disclosure and investor protection.
Keywords: Cross-Listing, Disclosure, Investor Protection, Analyst Following, Analyst Forecast Error
JEL Classification: G14, G15, G18, G32
Suggested Citation: Suggested Citation
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