International Equity Markets
Advantages and disadvantages of cross listing on stock exchanges
When a company lists its stock exchange on many stock exchanges in different countries, it is referred to as cross listing. It entails exchanging in more than one country. However, a company can list its stocks on two stock exchanges in the same country. The administration is likely to be widened besides the generation of great pool of possible investors. In most cases, companies employ the common form of cross listing whereby they launch a primary listing in the country of origin before initiating a secondary listing in a foreign country. This happens when a business is pursuing to go global. For instance, an Australian firm expanding in the U.S. And seeks to reflect this in the best way (Dobbs & Goedhart, 2010).
The major reason of cross listing is to avail stock to many people across the world. Evidently, a business might bank more money by issuing new stocks. In addition, it increases the stock liquidity, which gives the business owners high flexibility in terms of stake ownership. Another benefit of cross listing is that it pushes companies to abide by the listing requirements of different countries. This makes companies appear more trust worthy and reliable to potential investors. Particularly, this is a great advantage to businesses based in environments where the government requires minimal information in public flotation. Therefore, companies are motivated to adhere to the toughest requirements of for instance; the U.S. can enhance its global credibility (Youxing, 2009).
Cross listing has a number of minor benefits. First, a company might benefit from double the chances of attracting media coverage. Another advantage is that cross listing provides the ease of acquiring a foreign firm in deals where payment is done in the form of stock exchange rather than cash. The cross listing of a company can choose the alternative of issuing stock manifested as bonuses to employees who work in relevant countries (Rubery, 2007).
Cross listing has a few inherent drawbacks. Most of then revolve around the need to...
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