Consequences of cross delisting events from the US and the UK stock exchanges since 2000

: an empirical study on market’s reaction on companies’ return and risk

Abstract

Cross listing has been amply discussed by academia. Only recently, as cross delisting events abound, researchers have turned their attention to the positive and negative effects of carrying out a cross delisting event. It is argued that the net benefits of cross listing are generally negative, especially for companies within a high disclosure and regulatory framework. As such, the current paper aims to understand the impact of cross delisting over a sample of 319 events from 2000 to 2012 in the LSE, NYSE and NASDAQ, 264 of them occurring with companies with domicile in Developed Economies and 55 of them with peers based in Emerging Economies. Negative abnormal returns (AR) were found to amount to -0.50% for the global sample on the announcement date, having companies from Developed Economies registering AR of -0.60% and those from Emerging Economies -1.42%. These AR aggravate if companies are under a strong growth environment. Additionally, risk has been shown to increase on the company’s fundamentals, with the Abnormal Volatility sharply increasing - namely for companies based in Developed Countries - along with higher standard deviation and local market beta. These finds suggest that companies should not engage in cross delisting, regardless of their primary Stock Exchange location.

Date of Award	10 Jul 2013
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Pamuan Bunkanwanicha (Supervisor)