Munich Personal RePEc Archive

Why are U.S. firms listed in foreign markets worth more?

Sarkissian, Sergei and Schill, Michael (2010): Why are U.S. firms listed in foreign markets worth more?

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Abstract

An expanding literature asserts that non-U.S. firms achieve a value premium for listing on U.S. equity markets. In this paper we examine the foreign listing premium across a global sample of home and host markets, including U.S. firms that list on non-U.S. stock exchanges. We find that the value premium of U.S. firms that list abroad is similar to that of non-U.S. firms that list on U.S. exchanges, and that many other home and host markets manifest a foreign listing premium. The cross-sectional variation in the value premium appears to have little association with any unique institutional feature of the market; rather it is related to variation in pre-listing valuation ratios. We establish that the foreign listing premium disappears once we control for the firm’s pre-listing valuation ratio.

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