NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

U.S. International Equity Investment

John Ammer, Sara B. Holland, David C. Smith, Francis E. Warnock

NBER Working Paper No. 17839
Issued in February 2012
NBER Program(s):   IFM

U.S. investors are the largest group of international equity investors in the world, but to date conclusive evidence on which types of foreign firms are able to attract U.S. investment is not available. Using a comprehensive dataset of all U.S. investment in foreign equities, we find that the single most important determinant of the amount of U.S. investment a foreign firm receives is whether the firm cross-lists on a U.S. exchange. Correcting for selection biases, cross-listing leads to a doubling (or more) in U.S. investment, an impact greater than all other factors combined. We also show that our firm-level analysis has implications for country-level studies, suggesting that research investigating equity investment patterns at the country-level should include cross-listing as an endogenous control variable. We describe easy-to-implement methods for including the importance of cross-listing at the country level.

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An data appendix is available at http://www.nber.org/data-appendix/w17839

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Document Object Identifier (DOI): 10.3386/w17839

Published: Journal of Accounting Research. Volume 50, Issue 5, pages 1109–1139, December 2012

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