INTERNATIONAL CROSS-LISTING AND ORDER FLOW MIGRATION - EVIDENCE FROM AN EMERGING MARKET

Policymakers in emerging markets are increasingly concerned about the consequences for the domestic equity market when companies list stock abroad. We show that the effects of cross-listing depend on the qualit y of intermarket information linkages. We investigate these issues wit h unique data from the Mexican equity market. The impact of cross-list ing is complex-balancing the costs of order flow migration against the benefits of increased intermarket competition. These effects are exac erbated by equity investment barriers that induce segmentation of the domestic equity market. Consequently, the benefits and costs of cross- listing are not evenly spread over all classes of shareholders.