An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Heibatollah Sami
Lehigh University

Haiyan Zhou
University of Texas - Pan American

Abstract: We investigate the impact of cross-listings on information asymmetry risk, the cost of capital and firm value of a group of cross-listed Chinese companies. Our paper is the first one to examine the effect of cross listing on information asymmetry risk. We propose that the Chinese cross-listed companies have lower information asymmetry risk, lower cost of capital and higher firm value than their non-cross-listed counterparts. We find in both univariate and multivariate tests that cross-listed companies enjoyed lower information asymmetry risk in the domestic market compared with the non-cross-listed companies. We also find that cross-listed companies have lower cost of capital in the cross-listing market than non-cross-listed companies in the domestic markets. Finally, we find that cross-listed companies are associated with higher firm value as measured by Tobin’s Q. These results have implications for international investors.

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