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
