International Cross-Listing and Order Flow Migration: Evidence from an Emerging Market


  • Ian Domowitz,

  • Jack Glen,

  • Ananth Madhavan

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    • Domowitz is from Northwestern University, Glen is with the International Finance Corporation, and Madhavan is at the University of Southern California. Financial support from the World Bank is gratefully acknowledged. Expert research assistance and several helpful suggestions were provided by Mark Coppejans. We thank Baizhu Chen, Harry DeAngelo, Vihang Errunza, Margaret Forster, René Garcia, Tom George, Andrei Kirilenko, Brian Pinto, René Stulz, and an anonymous referee for their helpful comments. We are also grateful to seminar participants at the University of Chicago, International Finance Corporation, London School of Economics, London Business School, University of Southern California, Vanderbilt University, Washington University, NYU Salomon Center Conference on Emerging Markets, and the SBF Paris Bourse Conference on Market Microstructure for their suggestions. Any errors are entirely our own. The comments and opinions contained in this paper are those of the authors and do not necessarily ref lect those of the International Finance Corporation or the World Bank.


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 quality of intermarket information linkages. We investigate these issues with unique data from the Mexican equity market. The impact of cross-listing is complex—balancing the costs of order flow migration against the benefits of increased intermarket competition. These effects are exacerbated 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.