When Does Internationalization Enhance the Development of Domestic Stock Markets?

Hargis, Kent; Ramanlal, Pradipkumar

doi:10.1006/jfin.1998.0237

Cited by 43 publications

(27 citation statements)

References 22 publications

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“…While the literature in this stream is still at an early stage, debates have already begun on the viability of the two alternative hypotheses. Hargis and Ramanlal (1998) were the first to develop a model of the impact of international cross-listing on domestic market liquidity and trading volume to determine when domestic market development is likely to follow. Their conclusion is similar to that of Domowitz, Glen and Madhavan (1997) in that market development depends critically on greater information transparency between markets.…”

Section: Real Effects Of Cross-listingsmentioning

confidence: 99%

The World of Cross-Listings and Cross-Listings of the World: Challenging Conventional Wisdom*

Karolyi

2006

Review of Finance

446

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There has long prevailed a conventional wisdom rationalizing why firms pursue overseas listings. It argues that firms seek such opportunities to benefit from a lower cost of capital that arises because their shares become more accessible to global investors. Much recent evidence challenges this conventional wisdom. In fact, several new research initiatives have been proposed that factor into the overseas listing decision many more complex risks that globalization can create at the firm level, such as agency conflicts, transparency and disclosure concerns, and other corporate governance problems. The goal of this article is to survey, synthesize and critically review this new literature and to identify yet unresolved questions to answer.

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Section: Real Effects Of Cross-listingsmentioning

confidence: 99%

The World of Cross-Listings and Cross-Listings of the World: Challenging Conventional Wisdom*

Karolyi

2006

Review of Finance

446

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“…However, it is quite possible that opening a new trading venue abroad will affect the level of domestic trading volume. In principle, this effect is ambiguous (Hargis and Ramanlal (1998)). Specifically, the cross-listing may induce trade diversion away from the home exchange.…”

Section: Influence Of Trade Frictions On the Distribution Of Tradementioning

confidence: 99%

Where Is the Market? Evidence from Cross-Listings in the United States

Halling¹,

Pagano²,

Randl³

et al. 2007

Rev. Financ. Stud.

116

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We analyze the location of stock trading for firms with a US cross-listing. The fraction of trading that occurs in the United States tends to be larger for companies from countries that are geographically close to the United States and feature low financial development and poor insider trading protection. For companies based in developed countries, trading volume in the United States is larger if the company is small, volatile, and technology-oriented, while this does not apply to emerging country firms. The domestic turnover rate increases in the cross-listing year and remains higher for firms based in developed markets, but not for emerging market firms. Domestic trading volume actually declines for companies from countries with poor enforcement of insider trading regulation. (JEL G15, G30.) Many companies list their shares not only on their domestic exchange, but also on foreign exchanges-a fact for which several reasons have been offered and explored (see Saudagaran (1988); Karolyi (1998Karolyi ( , 2006Baker, Nofsinger, and Weaver (2002);Pagano, Röell, and Zechner (2002);Doidge, Karolyi, and Stulz (2004);and Sarkissian and Schill (2004), among others). One motive often hypothesized for this decision is that cross-listing facilitates trading by foreign investors. If so, then one would expect cross-listings to be followed by fairly substantial and persistent trading activity in the foreign market.

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“…Ji (2003) attributes this co-movement to the common investor base in U.S. stocks and ADRs. Third, as a result of listing on a major U.S. exchange, ADRs are more liquid than their purely domestic counterparts (Hargis and Ramanlal, 1998;Karolyi, 1998). This increases the probability that the risk prices and risk premiums of ADRs are similar to those of the stocks of the host market because U.S. investors may not require a liquidity premium on ADRs.…”

Section: Issues Related To the Use Of Adrs In Tests Of Integrationmentioning

confidence: 97%

The evolution of stock market integration in the post-liberalization period – A look at Latin America

Hunter

2006

Journal of International Money and Finance

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When Does Internationalization Enhance the Development of Domestic Stock Markets?

Cited by 43 publications

References 22 publications

The World of Cross-Listings and Cross-Listings of the World: Challenging Conventional Wisdom*

The World of Cross-Listings and Cross-Listings of the World: Challenging Conventional Wisdom*

Where Is the Market? Evidence from Cross-Listings in the United States

The evolution of stock market integration in the post-liberalization period – A look at Latin America

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