Working Paper: NBER ID: w17839
Authors: John Ammer; Sara B. Holland; David C. Smith; Francis E. Warnock
Abstract: U.S. investors are the largest group of international equity investors in the world, but to date conclusive evidence on which types of foreign firms are able to attract U.S. investment is not available. Using a comprehensive dataset of all U.S. investment in foreign equities, we find that the single most important determinant of the amount of U.S. investment a foreign firm receives is whether the firm cross-lists on a U.S. exchange. Correcting for selection biases, cross-listing leads to a doubling (or more) in U.S. investment, an impact greater than all other factors combined. We also show that our firm-level analysis has implications for country-level studies, suggesting that research investigating equity investment patterns at the country-level should include cross-listing as an endogenous control variable. We describe easy-to-implement methods for including the importance of cross-listing at the country level.
Keywords: US investment; crosslisting; foreign equity; international finance
JEL Codes: F3; G11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| crosslisting on a US exchange (G15) | US investment (F21) |
| crosslisting on a US exchange (G15) | average US holdings in foreign firms (F23) |
| crosslisting on a US exchange (G15) | crosslisting effect accounts for US investment (F21) |