Vagabond shoes longing to stray: Why foreign firms list in the United States

How do firms that go public decide whether to list on a major stock exchang e or locally? Using a unique data set on Israeli IPOs in the US and Tel Avi v, we show that companies that list in the US are young and overwhelmingly high-tech oriented. We argue that high-quality innovative firms are willing to incur additional costs associated with listing in the US in order to re veal their value and distinguish themselves from firms that issue stock bac k home. Costs of listing in the US include first day underpricing and relin quishing corporate control. (C) 2001 Elsevier Science B.V. All rights reser ved. JEL classification: G1; G15; G32.