Stocks traded on nyse and nasdaq
Cross listing of shares is when a firm lists its equity shares on one or more foreign stock exchange in addition stocks traded on nyse and nasdaq its domestic exchange.
This concept is distinctly different than examples such as: In most cases, the ADR is convertible back into the original instrument stocks traded on nyse and nasdaq needs to go through a process of conversion. However, many companies cross-list, where the stock is technically fungible between exchanges.
Royal Dutch Shell, IBM, and Siemens are all examples where the same issue is traded in multiple markets "multi-listed". Prices are subject to stocks traded on nyse and nasdaq market conditions, as well as FX fluctuations and are not kept in perfect parity between markets. While 'technically' fungible, these separate primary listings they would all be considered 'primary' listings are subject to re-registration which creates significant settlement risk if an investor wants to buy stocks traded on nyse and nasdaq one exchange and sell in another especially where the currencies differ.
Also, this is distinct from being 'admitted for trading' where a foreign share is accessible in a different market through an exchange convention, and not actually registered within that different market. Cross-listing is especially common for companies that started out in a small market but grew into a larger market. For example, numerous large non-U. Depository Receipts are instruments derived from another underlying instrument while Multi-listed instruments represent the actual stock of a company.
Depository Receipts are convertible back to ordinary shares, following a process dependent upon the sponsoring facility that created the instrument. Ownership of a Depository Receipt does not convey the same rights as a direct holder of equity shares until the Receipt is surrendered and converted into an actual equity share holding. Multi listed or cross-listed shares, by contrast, are technically the same financial instrument.
Fungibility is a concern across markets. There is a re-registration process that must occur to move the number of outstanding shares from one jurisdiction to the other. This is primarily due to market inefficiencies and structures required to maintain the integrity of registered shares within specific jurisdictions typically regulatory driven.
It is important to note that IBM is also cross-listed in Frankfurt, in which case, those transactions will settle via the local German market processes.
The academic literature has identified a number of different arguments to cross-list abroad in addition to a listing stocks traded on nyse and nasdaq the domestic exchange. Roosenboom and Van Dijk  distinguish between the following motivations:. There are, however, also disadvantages stocks traded on nyse and nasdaq deciding to cross-list: Some financial media have argued that the implementation of the Sarbanes-Oxley act in the United States has made the NYSE less attractive for cross-listings, but recent academic research finds little evidence to support this, see Doidge, Karolyi, and Stulz A questionnaire asking managers of international companies has shown [ citation needed ] that firms cross-list in the United States mainly because of specific U.
On the question of what deters them from an official US listing, they mentioned the time-consuming and expensive US-GAAP reconciliations as well as listing fees as the hardest impediments. Additional disclosure requirements were cited as less difficult to stocks traded on nyse and nasdaq.
There is a vast academic literature on the impact of cross-listings on the value of the cross-listed firms. Most studies for example, Miller, find that a cross-listing on a U. Doidge, Karolyi, and Stulz  show that companies with a cross-listing in the United States have a higher valuation than non-cross-listed corporations, especially for firms with high growth opportunities domiciled in countries with relatively weak investor protection.
Recent research,  shows that the listing premium for crosslisting has evaporated, due to new U. Some recent academic research finds that smaller foreign firms seeking cross listing venues may be opting for UK exchanges over U.
On the other hand, larger firms seeking "bonding" benefits from a U. The academic literature largely ignores cross-listings on non-U. However, there are many cross-listings on exchanges in Europe and Asia. In the s there was a wave of cross-listings of U. These findings suggest that cross-listings on Anglo-Saxon exchanges create more value than on other exchanges. They also highlight the incomplete understanding of why firms cross-list outside the UK and the United States, as many of the arguments discussed above enhanced liquidity, improved disclosure, and bonding do not apply.
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