Has New York Become Less Competitive in Global Markets? Evaluating Foreign Listing Choices Over Time

Craig Doidge, G. Andrew Karolyi, Rene M. Stulz

NBER Working Paper No. 13079
Issued in May 2007
NBER Program(s):Corporate Finance Program

We study the determinants and consequences of cross-listings on the New York and London stock exchanges from 1990 to 2005. This investigation enables us to evaluate the relative benefits of New York and London exchange listings and to assess whether these relative benefits have changed over time, perhaps as a result of the passage of the Sarbanes-Oxley Act of Congress (SOX) in 2002. We find that cross-listings have been falling on U.S. exchanges as well as on the Main Market in London. This decline in cross-listings is explained by changes in firm characteristics rather than by changes in the benefits of cross-listings. We show that, after controlling for firm characteristics, there is no deficit in cross-listing counts on U.S. exchanges related to SOX. Investigating the cross-listing premium from 1990 to 2005, we find that there is a significant premium for U.S. exchange listings every year, that the premium has not fallen significantly in recent years, that it persists even when allowing for unobservable firm characteristics, and that there is a permanent premium in event time. In contrast, there is no premium for London listings for any year. Cross-listing in the U.S. leads firms to increase their capital-raising activity at home and abroad while a London listing has no such impact. Our evidence is consistent with the theory that an exchange listing in New York has unique governance benefits for foreign firms. These benefits have not been seriously eroded by SOX and cannot be replicated through a London listing.

download in pdf format
   (395 K)

email paper

A non-technical summary of this paper is available in the May 2008 NBER Digest.  You can sign up to receive the NBER Digest by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w13079

Published: Craig Doidge & G. Andrew Karolyi & René M. Stulz, 2009. "Has New York become less competitive than London in global markets? Evaluating foreign listing choices over time☆," Journal of Financial Economics, vol 91(3), pages 253-277.

Users who downloaded this paper also downloaded* these:
Borts Regional Cycles of Manufacturing Employment in the United States, 1914-1953
Doidge, Karolyi, and Stulz w8538 Why are Foreign Firms Listed in the U.S. Worth More?
Doidge, Karolyi, and Stulz w14245 Why Do Foreign Firms Leave U.S. Equity Markets?
Bekaert, Harvey, and Lundblad w10560 Growth Volatility and Financial Liberalization
Doidge, Karolyi, Lins, Miller, and Stulz w11162 Private Benefits of Control, Ownership, and the Cross-Listing Decision
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us