Corporate Governance, International Cross Listing and Home Bias

The equity of Canadian-listed firms trades at a discount to U.S.-listed firms. This discount may be due to weaker corporate governance in Canada relative to the United States. Canadian firms may mitigate this discount by cross listing on a U.S. stock exchange. Results show that Canadian firms cross listed on a U.S. exchange achieve a higher valuation than firms listed exclusively in Canada, after controlling for factors known to affect valuation. Canadian firms that are predominantly traded in the U.S. receive similar valuations to other U.S.-listed firms, while cross listed Canadian firms with little U.S. turnover continue to trade at a discount