Cross-listing and its implications

Abstract

Purpose – The purpose of this study is to determine whether cross-listing has any effect on share price and trading volume. The focus is on non-U.S. companies which have listed their securities in the United States. The study also aims to analyse the implications that arise from cross-listing. Design – To achieve the objective of this study, both a qualitative and quantitative approach were used. Following extensive research on the literature available, 3 interviews were conducted with local professionals in the trading field and subsequently, calculations were carried out using Microsoft Excel. Findings – Many of the arguments brought forward by the interviewees were in line with the literature studied and their analytical point of view contributed towards enhanced findings with regards to the benefits and drawbacks of cross-listing securities overseas. The findings from the quantitative analysis were also vital since the results substantiated the statements made by particular scholars. Conclusions – The results of the stocks analysed indicate that there is no cross-listing effect with regards to abnormal returns, however, it is essential to note that this must not be seen in isolation but also in light of the advantages presented by cross-listing as studied in the literature and sustained by the interviewees. Value – This study adds value in terms of the strategies that companies seeking to cross-list may follow so as to capitalise on the advantages that may be enjoyed.