Are There Valuation and Operating Performance Gains from International Cross Listing? Evidence from Taiwan’s Depositary Receipt Issuers

This article investigates if there are valuation and operating performance gains from international cross listing, using a sample of 55 Taiwanese firms that instituted deposit receipt (DR) programs in the US, the UK and Luxemburg from 1992 to 2009. We find that Tobin’s q, stock returns and operating performance of DR issuers deteriorate and under-perform their benchmarks substantially after issue. Taiwan has been an emerging market not very accessible for foreign investors for the best part of our sample period and DR issuers from Taiwan should be in a better position to reap valuation gains and other benefits by listing their shares in more prestigious markets. Our findings suggest that the potential benefits of international cross listing might not be as significant as previously thought. These results are of practical relevance and contribute to the ongoing debate on the costs and benefits of international cross listing. Copyright Eurasia Business and Economics Society 2013