VALUATION EFFECTS OF FOREIGN COMPANY LISTINGS ON US EXCHANGES

This study examines post-listing equity price performance of foreign f irms which cross-listed sponsored American Depository Receipts (ADRs) on the New York and the American Stock Exchanges during the period 198 2-1992, We use three valuation metrics-price-to-book, price-to-cash-ea rnings, and price-to-earnings-which are adjusted for the home country and world industry indices to which the listing firm's stock belongs, We find positive valuation effects associated with cross-listing for b oth country-benchmarked and industry-benchmarked price ratios, Variabl es that proxy for home country characteristics such as governance styl es, disclosure quality, market liquidity, and so forth are unable to e xplain the cross-sectional variation in the data, Our results thus sug gest that cross-listing in the U.S. enhances valuations for listing fi rms by simply reducing the overall effect of segmentation among differ ent national securities markets.