International Cross-Listing of Firms on Major Stock Markets: A survey of the Literature

This contribution is aimed at presenting the large research produced in this particular field of international finance that constitute cross-listing —the secondary listing of company’s shares on an overseas exchange. For companies, exchanges and investors, the phenomenon of cross-listing raises different non-trivial questions. This paper reviews the most important research initiatives addressing the economic effects of this important corporate decision.
Early studies were drawing much of their argumentation from segmentation theory, concluding that cross-listing was a way for companies to lower barriers to international investment in their stocks, leading to a revaluation of their shares. Equally crucial as segmentation was in the early course of the cross-listing activity, new initiatives are now exploring many additional ways that help to get a better picture of the rationales underpinning the far-reaching effects of cross-listing: valuation impacts and other financial benefits, change in the company’s market profile, and interaction with her home and host markets.
Cross-listing is then at a cross-roads of different theories. The advances in academic contributions over the last decade have helped to understand some of the underlying dynamics and rationales surrounding it, but are also leaving some unanswered questions.