Overseas Stock Listings and Delistings

Download or read book Overseas Stock Listings and Delistings written by Shinhua Liu and published by . This book was released on 2001 with total page 254 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the reasons for and the price effects of foreign listings and voluntary delistings on the Tokyo Stock Exchange (TSE). Such an effort is worthwhile for the following reasons. First, unlike previous studies on U.S. listings abroad, which focus almost exclusively on the listing day, this study examines the price effects at both the announcement and listing day. Second, it analyzes the price effects of seasoned equity offerings (SEO) at the cross-listings by U.S. firms for the first time. Finally, it is the first study that investigates voluntary foreign delistings and the accompanying SEO impacts Major findings are summarized as follows. Foreign firms list their shares in Tokyo for two basic reasons: raising funds from Japan and promoting their name recognition in Japan. Firms delist when their trading volumes in Tokyo become so low as not to be able to justify the relatively low costs of maintaining their listings. Home-market share prices drop significantly both upon the announcement of the listing and at the actual listing. However, no significant price reactions appear in the home market both around the announcement of the delisting and at the actual delisting Several potential explanations are offered for the non-responses. Unlike SEOs by foreign firms in the U.S., SEOs by U.S. firms at their TSE listings do not seem to affect home-market share prices. These findings contrast with theoretical predictions and provide a basis for further theoretical research in asset pricing.