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“You Can Enter but You Cannot Leave…”: U.S. Securities Markets and Foreign Firms




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    • Marosi is from the School of Business, University of Alberta. Massoud is from the Schulich School of Business, York University. Marosi would like to acknowledge funding from the University of Alberta. Massoud would like to acknowledge financial support from the Social Sciences and Humanities Research Council of Canada. We would like to thank an anonymous referee; the editors; Andrew Karolyi; Vikas Mehrotra; Randall Morck; Chris Perignon; Edward Rock; Anthony Saunders; Barry Scholnick; and the participants at the Northern Finance Association meeting 2006, Alberta/Calgary Banff Conference 2006, and seminars at the Schulich School of Business and Simon Fraser University for their helpful comments. Guo Hou, Omer Mohammad, Blake Phillips, Rahul Ravi, Igor Semenenko, and Carmen Stefanescu provided excellent research assistance.


Although a number of prior papers have argued the benefits to foreign firms of cross-listing their shares in the U.S., the number of foreign firms exiting U.S. capital markets has been increasing. This has occurred despite the difficulties foreign firms face in deregistering from the Securities and Exchange Commission (SEC). This paper examines the reasons underlying this trend. One of our main findings is that the passage of the Sarbanes-Oxley Act has reduced the net benefits of a U.S. listing and registration, particularly for smaller foreign firms with lower trading volume and stronger insider control.

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