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.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Hypothesis
- Outline of the paper
- Definition
- Reasons to cross-list
- The bonding hypothesis
- The market segmentation hypothesis
- Investor Recognition Hypothesis
- The liquidity hypothesis
- Method
- Description
- Summary
- Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
The thesis project aims to investigate whether there is sufficient empirical evidence to support the hypothesis that companies from developed countries with well-functioning capital markets have experienced a decline in benefits from cross-listing in the United States. The research examines the trend of European companies terminating their U.S. cross-listings following changes in deregistration requirements in 2007.
- The decline in benefits of U.S. cross-listings for companies from developed countries.
- The role of capital market development in developed countries in driving delisting decisions.
- The impact of regulatory changes on cross-listing trends.
- The comparison of benefits and costs associated with U.S. cross-listings.
- The analysis of the reasons cited by companies for delisting from U.S. exchanges.
Zusammenfassung der Kapitel (Chapter Summaries)
The introduction provides a background on the conventional wisdom regarding the benefits of cross-listing in the United States, particularly for foreign firms. It highlights the significant number of European companies that delisted from U.S. stock exchanges after 2007, citing reasons such as declining benefits, increased costs, and the development of their home capital markets.
The hypothesis section introduces the main argument of the thesis, suggesting that companies from developed countries, which previously benefited greatly from U.S. cross-listing, no longer experience the same level of advantages. The paper aims to examine the reasons behind this shift, focusing on the development of capital markets in developed countries.
The method section will outline the research approach used to test the hypothesis. It will describe the data sources, analytical techniques, and variables employed in the study.
The description section will present the findings of the research, analyzing the trends in U.S. cross-listings, the reasons cited for delisting, and the impact of capital market development on the benefits of cross-listing.
The summary chapter will synthesize the key findings of the research, highlighting the main conclusions and implications of the study.
Schlüsselwörter (Keywords)
The primary keywords and focus topics of this thesis include cross-listing, U.S. capital markets, developed countries, capital market development, delisting, benefits of cross-listing, costs of cross-listing, regulatory changes, European companies, and empirical evidence. The research centers on the evolving dynamics of cross-listing, examining the factors that influence companies' decisions to list or delist from U.S. stock exchanges, particularly in light of the development of capital markets in developed countries.
- Quote paper
- Laura Kalinska (Author), 2015, Trading company shares at multiple stock exchanges. Costs and Benefits of U.S. cross-listings, Munich, GRIN Verlag, https://www.grin.com/document/321290
