英语论文网

Why Do Companies List Shares Abroad?:A Survey of the Evidence and Its Managerial Implications
BY G.ANDREW KAROLYI
The purpose of this monograph is to survey the academic literature on 代写留学生作业the economicimplications of the corporate decision to list shares on an overseas stock exchange.Myfocus is on the valuation and liquidity effects of the listing decision,and the impact of listingon the company’s global risk exposure and its cost of equity capital.The evidence shows:
(1)share prices reacts favorably to cross-border listings in the first month after listing;
(2)post-listing price performance up to one year is highly variable across companiesdepending on the home and listing market,itscapitalization,capital-raising needs
and other company-specific factors;
(3)post-listing trading volume increases on average,and,for many issues,home-markettrading volume increases also;
(4)liquidity of trading in shares improves overall,but depends on the increase in totaltrading volume,the listing location and the scope of foreign ownership restrictions in the home market;
(5)domestic market risk is significantly reduced and is associated with only a smallincrease in global market risk and foreign exchange risk,which can result in a netreduction in the cost of equity capital of about 126 basis points;
(6)American Depositary Receipts represent an effective vehicle to diversify U.S.-basedinvestment programs globally;
(7)stringent disclosure requirements are the most important impediment to cross-border
listings.
I.INTRODUCTION
The globalization of the marketplace for capital has fostered tremendous compe-tition among the major overseas stock exchanges to capture the growing demandand supply for cross-border equity flows.During the 1980s,individuals and insti-tutions began investing funds in foreign equity markets to diversify their portfoliosand to earn higher risk-adjusted yields than was possible with a fully domestic
portfolio.At the end of 1995,non-U.S.stocks in U.S.pension and endowment
funds comprised about 12%of all equity holdings totaling about$325 billion,afour-fold increase from 1990.1 In Britain and Japan,these figures have reached
19.5%and 13%,respectively.2 This growth in the demand for equity has spurredSee Cochrane,Shapiro and Tobin(1996)citing statistics from the Flow of Funds Accounts of theFederal Reserve Board,Washington,DC.
2
See“Who’s in the Driving Seat?A Survey of the World Economy”in The Economist(October
7,1995)citing statistics from the Bank for International Settlements and the International MonetaryFund.
Financial Markets,Institutions&Instruments,V.7,N.1,January 1998.c 1998 New York University SalomonCenter.Published by Blackwell Publishers,350 Main Street,Malden,MA 02148,USA,and 108 Cowley Road,
Oxford,OX4 1JF,UK.2 G.Andrew Karolyiincreased trading in non-U.S.issues on home markets.For example,purchasesand sales of non-U.S.equities on the New York(NYSE)and American(Amex)stock exchanges and Nasdaq over-the-counter markets in 1995 reached an annualvolume of about$810 billion,which is equivalent to about 12%of total volume
on the NYSE alone.3
In response to this globalization trend,increasing numbers of companies havechosen to raise capital through equity issues beyond the borders of their homemarket.According to the OECD in 1995,private sector cross-border capital flowsin equities have risen to 35%of the total flow in all securities,as compared withonly 5%in th