Determinants of Investor Demand for Cross-Listed Firms
Article first published online: 2 JUL 2010
© 2010 New York University Salomon Center and Wiley Periodicals, Inc.
Financial Markets, Institutions & Instruments
Volume 19, Issue 3, pages 245–267, August 2010
How to Cite
Athanassakos, G., Ackert, L. F., Naydenova, B. and Tafkov, I. (2010), Determinants of Investor Demand for Cross-Listed Firms. Financial Markets, Institutions & Instruments, 19: 245–267. doi: 10.1111/j.1468-0416.2010.00159.x
- Issue published online: 2 JUL 2010
- Article first published online: 2 JUL 2010
- trading volume;
By focusing on the decisions of investors to invest in cross-listed stocks, this paper presents new evidence on why we observe striking differences in the percentage of trade in foreign markets for cross-listed stocks. With a large sample of Toronto Stock Exchange (TSX) stocks cross-listed in the U.S. and Canada, we document the effect of investor recognition and risk characteristics on the distribution of trading volume. Firms that are more visible to American investors are traded more heavily in the U.S. At the same time, firms that offer diverse risk characteristics are attractive to Americans. While investors understand the benefits of international diversification, as they are attracted to stocks that are different (e.g., the stock of small firms with few assets in the U.S.), they also seek stocks that provide them with high returns.