Reverse Cross-listings-The Coming Race to List in Emerging Markets and an Enhanced Understanding of Classical Bonding

摘要

In our increasingly global capital markets, the development of reverse cross-listing seems, at first cut, to be slightly counter-intuitive. Prior scholarship indicates that one of the most common reasons for firms to cross-list in the United States or the U.K. is to obtain the benefits associated with being listed in a jurisdiction perceived to be more protective of investors than the firm's home country- the legal bonding hypothesis. This added level of perceived protection may make the firm a more appealing investment opportunity and cause investors to value the issuer more highly. However, reverse cross-listing runs in the opposite direction-firms from stronger perceived investor protection regimes, such as the United States or the U.K., may still list in weaker perceived investor protection regimes, such as India or China. This article provides an initial exploration into why reverse cross-listing might arise with respect to specific product markets, and what the practice may tell us about the decision to cross-list generally, regardless of the listing direction.