U.S. International Equity Investment
NBER Working Paper No. 17839
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.
Published: Journal of Accounting Research. Volume 50, Issue 5, pages 1109–1139, December 2012
You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.
An online appendix is available for this publication.