Cross-Listing, Investment Sensitivity to Stock Price and the Learning Hypothesis

Abstract : We show that the sensitivity of corporate investment to stock price is higher for firms cross-listed in the U.S. than for firms that never cross-list. This difference is strong, does not exist prior to the cross-listing date, and does not vanish over time after this date. Moreover, the impact of a U.S. cross-listing on the investment-to-price sensitivity is stronger for firms that rank high on measures of governance quality, which suggests that our finding is not primarily driven by the improvement in corporate governance associated with a U.S cross-listing. Instead, we argue that a cross-listing enhances managers' reliance on stock prices because it makes stock prices more informative to managers. In support of this learning hypothesis, we find that the positive impact of a U.S. cross-listing on the investment-to-price sensitivity is higher when a cross-listing is more likely to stimulate trading based on information new to managers.
Type de document :
Rapport
2012
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https://hal-hec.archives-ouvertes.fr/hal-00722609
Contributeur : Amaury Bouvet <>
Soumis le : jeudi 2 août 2012 - 16:03:52
Dernière modification le : jeudi 11 janvier 2018 - 06:19:31

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  • HAL Id : hal-00722609, version 1

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Thierry Foucault, Laurent Frésard. Cross-Listing, Investment Sensitivity to Stock Price and the Learning Hypothesis. 2012. 〈hal-00722609〉

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