Is there a Cross Listing Premium for Non-Exchange Traded Depositary Receipts?

In this paper, I examine the valuation effects of trading in the U.S. as non-exchange issues i.e. Level 1 and 144 firms for non-U.S. firms. The study is motivated by two facts; first, while the number of new Level 2/3 issues has fallen 2001, Level 1 issues have remained an attractive listing option for non-U.S. firms. Second, while on theoretical grounds, firms from low-disclosure regimes have most to gain from exchange listing; these firms tend to list in the U.S. as non-exchange issues. Here, I examine whether the continuing attractiveness of, and the tendency of firms to choose a Level 1/144a listing is value enhancing. My results suggest that the tendency on the part of firms from lowdisclosure regimes to choose non-exchange issues is justified. Relative to their highdisclosure peers, these firms tend to gain most from trading in the U.S. However, for Rule 144a issues, the valuation gains are short-lived

Dividend payout and corporate governance in emerging markets: which governance provisions matter? Department of Economics Finance & Accounting Working Paper Series N230-12

In this paper I examine the relationship between individual corporate governance provisions and corporate dividend payout. Using a sample of 220 firms from 21 emerging market countries, I show that dividend payout is an outcome of strong corporate governance. On closer inspection, I find that dividend payouts tend to be greater in firms which score highly in measures of board independence and accountability. I find some evidence which suggests that dividends substitute for a lack of transparency for emerging market firms

Financial Development, Internationalisation and Firm Value

In this article I show that both aspects of financial development, namely, liberalisation and deepening, and fi nancial internationalisation proxied using crosslistings in the US creates value for emerging market fi rms. Financial deepening, or more precisely, stock market deepening enhances value. In contrast, bank sector deepening only serves to reduce value because it is associated with large-scale corporate expansion and a fall in market capitalisation. Like others, I document a cross-listing premium for Level 2/3 cross-listings in the US. The cross-listing premium is typically less than the gains from fi nancial liberalisation, but they are similar in magnitude over the period examined

Does cross listing in the U.S. really enhance the value of emerging market firms?

In this paper, I study the valuation effects of cross listing in the U.S. for a panel of emerging market firms over the period from 1990 to 2003. In line with Kristian-Hope et al. (2007), I find that only those firms from high disclosure regimes gain from Level 2/3 listing in the U.S. The gains are not immediate, but materialize once the firm has listed in the U.S. for at least five years. I also document long-term, but not immediate valuation gains for Level 1 over-the-counter issues. In contrast to Level 2/3 issues, the gains are concentrated amongst firms from low-disclosure regimes. I find no positive valuation effects for Rule 144a private placements. The results suggest that the decision on the part of the majority of firms from low-disclosure regimes not to list as exchange traded depositary receipts is warranted

Are There Permanent Valuation Gains from Becoming Investable?

In this paper, I examine whether the “investable premium” documented by Mitton and O’Connor (2010) is permanent. In a series of firm-fixed effects regressions, I show that the “investability premium” disappears after five years of becoming investable, but subsequently reappears, and appears permanent. At the very least, the “investable premium” tends to last at least as long as some other “internationalization premia” documented in the literature, and remains even after 12 years of becoming investable. The premium persists, even after controlling for observable and unobservable firm-level characteristics, industry growth, and indirect investability

Dividend payout and corporate governance along the corporate life-cycle. Economics Finance & Accounting Working Paper Series N228-12

Manuscript Type: Empirical Research Question/Issue: This study seeks to test the outcome and substitution agency models of dividends at different stages of the corporate life-cycle. Research Findings/Insights: In a sample of 220 firms from 21 emerging market countries, I show that the outcome model of dividends, which predicts that dividend payout increases in the strength of shareholder rights, prevails all along the corporate life-cycle, but only where creditor rights are strong. Hence, the agency cost of equity and debt version of the outcome model of dividends holds. I find no evidence in support of the substitution model of dividends. Theoretical/Academic Implications: The findings in this paper serve to highlight the profound influence that creditors exert on corporate payout policy. When shareholders enjoy considerable legal rights, but not so creditors, creditors demand, and firms consent to lower dividends. Furthermore, I find no evidence to suggest that firms substitute (large) dividends for poor governance in emerging markets

Dividend payout, corporate governance, and the enforcement of creditor rights in emerging markets. Economics Finance & Accounting Working Paper Series N227-12

In this paper I examine the relationship between the strength of creditor rights, their enforcement, corporate governance and corporate dividend payout in a sample of 281 emerging market firms. I show that the outcome model of dividends, which states that corporate dividend payout increases in the strength of corporate governance, holds in emerging markets, but only where the legal enforcement of creditor rights is strong. Where legal enforcement is weak, the shareholders of better-governed firms are not able to use their legal rights to extract large dividends from firms. The shareholders of better-governed firms are unable to extract large dividends from firms irrespective of the strength of creditor rights. That is, differences in creditor rights are not systematically related to dividend payout in the way predicted by the agency costs of debt and equity version of the outcome model of dividends

Cross-listing in the U.S. and domestic investor protection. Economics Department Working Papers Seroes N186/12/07

Using the change in ordinary dividend payout as a proxy for improved governance, I show that cross-listing in the U.S. is associated with enhanced protection for the minority ordinary shareholders of exchange listed non-U.S. firms. These firms substitute dividends for enhanced governance. I find no such effect for Rule 144a firms. Interestingly, I document evidence inconsistent with the legal bonding hypothesis for Level 1 firms. I believe that their ability to pay lower dividends post-listing is primarily due to their ability to credibly commit to fair treatment of their minority investors, given their record for equitable treatment of their ordinary shareholders. They achieve this reputation by consistently paying out a sizable proportion of their earnings as dividends. I find that the firm-level governance of Level 1 firms, as measured by the number of closely held shares improves in the post-listing period. I find no such effect for Rule 144a traded firms. My results also have important implications for the agency models of dividends

The effects of International Equity Cross-Listing on Investor Protection and Firm Value

In this thesis, I examine issues pertaining to equity cross-listing in the United States and the United Kingdom. Specifically, I examine two issues, namely the effects of an international equity cross-listing on domestic investor protection, and firm value. First, in Chapter 3, I examine the effects of listing in the U.S. on the level o f domestic investor protection for non-U.S. firms. Others have examined whether non- U.S. firms can ‘completely’ bond to the U.S. governance regime (like U.S. firms do), as the legal bonding hypothesis predicts. In general these studies conclude that bonding to the U.S. regime is ‘incomplete’. Implicit in this is the belief that domestic/ordinary shareholders are also protected, although this has not been examined. I explicitly examine this issue. My results suggest that the ordinary shareholders of non- U.S. cross-listed firms do enjoy additional protection under the U.S. governance regime. In the remainder o f the thesis, I examine die valuation effects o f listing abroad. I build upon the cross-sectional work of Doidge, Karolyi, and Stulz (2004) and Kristian-Hope, Kang, and Zang (2005), and examine the effects of listing abroad over time for Irish, Emerging, and both Emerging and Developed firms, respectively. My results suggest the following. In Chapter 4 I find that Irish firms that exchange cross-list experience an increase in value after listing abroad. This contrasts notably with the calendar year valuation discount reported by Doidge, Karolyi, and Stulz (2004) for Irish cross-listed firms. In contrast, Level 2/3 exchange-traded Emerging market firms are worth more than non-cross-listed firms in calendar time, but not necessarily in event time. The results outlined in Chapter 5 suggest that listing in the U.S. does not enhance value. After listing in the U.S., these firms are no longer worth more than non-crosslisted firms. Finally, in Chapters 6 and 7, I examine the valuation effects of listing for non-exchange traded issues. I find that trading in the U.S. via a non-exchange issue does not enhance value. The result holds irrespective of how I classify firms. Finally, I extend the later by examining the valuation effects of listing for non-exchange traded firms, on a country-by-country basis. I find that listing does enhance value for firms from certain countries

Are There Permanent Valuation Gains from Becoming Investable?

In this paper, I examine whether the “investable premium” documented by Mitton and O’Connor (2010) is permanent. In a series of firm-fixed effects regressions, I show that the “investability premium” disappears after five years of becoming investable, but subsequently reappears, and appears permanent. At the very least, the “investable premium” tends to last at least as long as some other “internationalization premia” documented in the literature, and remains even after 12 years of becoming investable. The premium persists, even after controlling for observable and unobservable firm-level characteristics, industry growth, and indirect investability