TY  - JOUR
AU  - Ammer,John
AU  - Holland,Sara B.
AU  - Smith,David C.
AU  - Warnock,Francis E.
TI  - Look at Me Now:  What Attracts U.S. Shareholders?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12500
PY  - 2006
Y2  - August 2006
UR  - http://www.nber.org/papers/w12500
L1  - http://www.nber.org/papers/w12500.pdf
N1  - Author contact info:
John Ammer
International Finance Division
Board of Governors of the Federal Reserve System
Washington DC 20551
E-Mail: john.ammer@frb.gov

Sara Holland
University of Georgia
Terry College of Business
E-Mail: sbh@uga.edu

David C. Smith
McIntire School of Commerce
University of Virginia
Charlottesville, VA 22903
Tel: 434/243-2272
E-Mail: dcs8f@comm.virginia.edu

Francis E. Warnock
Darden Business School
University of Virginia
Charlottesville, VA 22906-6550
Tel: 434/924-6076
Fax: 434/243-8945
E-Mail: warnockf@darden.virginia.edu
AB  - This paper investigates the underlying determinants of home bias using a comprehensive data set on U.S. investors' aggregate holdings of every foreign stock. Among those foreign stocks that are not listed on U.S. exchanges, which account for more than 96 percent of our usable data sample, we find that U.S. investors prefer firms with characteristics associated with greater information transparency, such as stronger home-country accounting standards. We document that a U.S. cross-listing is economically important, as U.S. ownership of a foreign firm roughly doubles upon cross-listing in the United States. We explore the cross-sectional variation in this "cross-listing effect" and find that the increase in U.S. investment is greatest for firms that are from weak accounting backgrounds and are otherwise informationally opaque, suggesting that the key effect of cross-listing is improvements in disclosure that are valued by U.S. investors. By contrast, cross-listing does not increase the appeal of stocks from countries with weak shareholder rights, suggesting that U.S. cross-listing cannot substitute for legal protections in the home country.  Nor does the cross-listing effect appear to be driven simply by increased "familiarity"� with the stock or lowered cross-border transactions costs.
ER  -