The focus of this special issue is on the behavioural factors surrounding a firm’s decision to cross-list its shares. The phenomenon of cross-listing on international markets has grown rapidly during the last decade, and has been facilitated by the deregulation and liberalisation of financial markets, and the major advances in communications and information technology which has made the flow of information across capital markets feasible.
The cross-listing literature provides anomalies that are of interest to researchers in behavioural finance. For instance, Gagnon and Karolyi (2004) find that shares that trade simultaneously on different markets violate the law of one price, and for some stocks the difference between prices of cross-listed shares and those of the home market shares can range from 66 percent premium to an 87 percent discount. Moreover, the authors suggest that cross-listed shares show higher systematic comovement with host market indexes and lower comovements with home market indexes than their equivalent home-market shares. The later result contradicts the traditional view of finance which states that comovement in prices should reflect comovement in fundamentals.
Furthermore, cross-listing may influence the behaviour of firms and corporate policy. For example, firms that cross-list on markets with better information environment than their home markets have to provide more disclosure and better earnings quality, which in turn induce more analysts to follow the firm. In addition, Georgen and Abdallah (2008) provide evidence that firms that cross-list on markets with better investor rights pay higher dividend after the cross-listing. A relatively under-researched area addresses the firm’s incentives to cross-list as a reaction to investors’ behavioural biases.
The aim of this special issue is to publish high quality research papers that enhance our understanding of the behavioural aspects of the cross-listing phenomenon. The guest editors welcome empirical, theoretical and critical work. As most of the previous studies address the implications of cross-listing in the context of US listing, the guest editors seek and encourage the submission of papers that provide a global perspective of the cross-listing.
Abdallah, W., and M. Goergen (2008), ‘The Impact of a Cross-listing on Dividend Policy’, International Journal of Corporate Governance, Vol. 1, No. 1, pp. 49-72.
Gagnon, L. and A. Karolyi (2004) “Multi-market trading and Arbitrage” working paper available at www.ssrn.com.
Topics of interest include, but not limited to:
- Comovement in return of the cross-listed stocks and "habitat-based" theory of comovement
- Price differential and limits to arbitrage
- Price differential and investor irrationality
- Investors' overconfidence and overvaluation of the cross-listed stocks
- Investors' sentiment and the long term underperformance of the cross-listed stocks
- Managerial irrationality and the decision to cross-list
- Investors' overconfidence and trading in cross-listed stocks
- Managers' overconfidence and takeover activity of cross-listed firms
- Cross-listing and anchoring effect
- Cross-listing and reputational bonding hypothesis versus legal bonding/segmentation hypotheses.
- Analysts' behaviour to cross-listing
- Cross-listing and the firm's information environment
- Sarbanes-Oxley Act, cross-listing and earnings management
- Cross-listing and corporate governance
- Cross-listing and dividend policy
Deadline for manuscript submission: 31 December, 2009