DP2681 The Geography of Equity Listing: Why Do Companies List Abroad?

Author(s): Marco Pagano , Ailsa A Röell , Josef Zechner

Publication Date: January 2001

Keyword(s): Cross-Listings , Going Public , Initial Public Offerings , Geography

JEL(s): G15 , G30 , G39

Programme Areas: Financial Economics

Link to this Page: www.cepr.org/pubs/dps/DP2681.asp

This Paper documents the aggregate trends in the foreign listings of companies and analyses both their distinctive pre-listing characteristics and their post-listing performance relative to other companies. In the 1986-97 interval, many European companies listed abroad, but did so mainly on US exchanges. At the same time, the number of US companies listed in Europe decreased. The cross-listings of European companies appear to have sharply different motivations and consequences depending on whether they cross-list in the United States or within Europe. In the first case, companies pursue a strategy of rapid expansion and large equity issues after the listing. They rely increasingly on export markets and tend to belong to high-tech industries. In the second case, companies do not grow more than the control group, and increase their leverage after the cross-listing. The only features common to all cross-listing companies are their large size and their tendency to be recently privatized companies.