Does Information Environment Change after Reverse Dual-listing?

Description

With the globalization of financial markets over the past three decades, more and morefirms used to choose to cross-list on other financial markets. However, cross-listing inthe 2000s was not as hot as it was in the 1990s. Apart from the decline in the number ofcross-listings, two trends can be observed in the global financial markets. First, manycross-listed firms choose to delist from developed markets. Second, some firms fromemerging markets that were cross-listed on developed markets now choose to reversedual-list on their emerging home markets. In the proposed research, we aim to addressthe phenomenon of reverse dual-listing.Normal dual-listing refers to the cases that are first listed on developed/emerging homemarkets, then dual-listed on developed markets. Reverse dual-listing refers to casesthat are first listed on developed host markets, then dual-listed on emerging homemarkets. Home market refers to the market where a firm's headquarter located, andother financial markets are regard as host markets to the firm.We will collect a sample of reverse dual-listing firms from the 42 member exchanges ofthe World Exchange Association. We aim to answer two questions. First, does the stockprice synchronicity of these firms change after reverse dual-listing? Second, do home-marketanalysts make better earnings forecasts than host-market analysts, and dohost-market analysts improve their forecasts after reverse dual-listing?Compared with pure home-market listed stocks, reverse dual-listed stocks shoulddisclose more information as they must meet the higher listing and disclosurerequirements of developed markets. Therefore, the reverse dual-listing setting allows usto investigate whether the increase in home-market analysts produces further firm-specificinformation and discover whether the information environment changes afterreverse dual-listing.We expect that many cross-listed firms will either delist from the developed markets, orkeep their listing status and dual-list on their home markets in the future. Therefore,with the increasing role of emerging markets in the global financial market, the findingsfrom our project will have important implications. We will address whether analysts inemerging markets can produce more firm -specific information and improve theinformation environment of shares traded in host markets. By examining the long-termstock performance, we will also be able to ascertain whether such reverse dual- listing isat the cost of existing host-market shareholders.