Cross-Border Regulatory Cooperation and Analyst Forecasts

Using the staggered entry of foreign countries into the Multilateral Memorandum of Understanding (MMoU) as a shock to the cross-border regulatory cooperation and information exchange, we find that foreign firms cross-listed in the U.S. show more analyst following, and less analyst forecast error and dispersion after their foreign home countries join the MMoU. The effect of the MMoU on analysts tends to be stronger for cross-listed firms with a greater level of information opacity and for analysts with greater difficulty forecasting cross-listed firms. Collectively, our findings suggest that strengthened cross-border regulatory cooperation helps reduce analyst information costs