Do U.S. Analysts Improve the Local Information Environment of Cross-Listed Stocks? Evidence from Recommendation Revisions

We investigate the role of U.S. analysts in facilitating home market information transmission for firms from 40 countries cross-listed in the U.S. Recommendation revisions by U.S. analysts lead to significantly higher (lower) abnormal returns (volumes) in the home market compared to those by local analysts. This U.S.-location premium to information production cannot be explained by a bonding or certification role of U.S. analysts or differences in broker or analyst characteristics. Our results suggest that U.S. analysts facilitate U.S. investors’ access to foreign firms’ home markets and improve the information environment particularly in countries where the local analyst advantage is smaller.