The costs of foreign single listing

ABSTRACT

A significant number of firms conduct their initial public offerings in a foreign market without a domestic listing; this is known as a foreign single listing. The existing literature has mainly focused on examining cross-listings – where firms are listed in both the domestic market and one or more foreign markets – with little attention to foreign single listings. This study examines the costs of foreign single listings. Using a sample of Chinese firms, we show that – on average – the stocks of foreign single-listed firms are undervalued by around 20–30% relative to cross-listed firms. The results are robust in both panel regressions and in a natural experiment analysis. Our findings have strong implications for firms which may consider listing overseas.

KEYWORDS:

• Foreign single listing
• cross-listing
• valuation
• information asymmetry

JEL CLASSIFICATION:

• F3
• G1
• G3

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [71302127 and 71772196]; the Special Research Fund for the Doctoral Program of Ministry of Education [20130016120001]; the Ministry of Education of Humanities and Social Science Project [17YJC630062]; the Young Elite Teacher Project of Central University of Finance and Economics [QYP1606];Program for Innovation Research in Central University of Finance and Economics; Fundamental Research Funds for the Central Universities.