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“You Can Enter but You Cannot Leave…”: U.S. Securities Markets and Foreign Firms
Author(s) -
MAROSI ANDRÁS,
MASSOUD NADIA
Publication year - 2008
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.2008.01402.x
Subject(s) - listing (finance) , commission , business , capital market , cross listing , insider , investor protection , insider trading , accounting , initial public offering , net capital rule , monetary economics , finance , economics , capital flows , market economy , corporate governance , law , liberalization , political science
Although a number of prior papers have argued the benefits to foreign firms of cross‐listing their shares in the U.S., the number of foreign firms exiting U.S. capital markets has been increasing. This has occurred despite the difficulties foreign firms face in deregistering from the Securities and Exchange Commission (SEC). This paper examines the reasons underlying this trend. One of our main findings is that the passage of the Sarbanes‐Oxley Act has reduced the net benefits of a U.S. listing and registration, particularly for smaller foreign firms with lower trading volume and stronger insider control.