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- Title
An Unexpected Test of the Bonding Hypothesis.
- Authors
Gagnon, Louis; Karolyi, G Andrew
- Abstract
In its 2010 Morrison v. National Australia Bank ruling, the U.S. Supreme Court determined that key fraud-related provisions of U.S. securities laws would apply only to transactions in foreign securities that take place on U.S. exchanges. We document a large increase in the price of U.S. cross-listed foreign stocks relative to their currency-adjusted equivalent home-market shares around the decision, which we associate with the newly differentiated legal status accorded U.S. cross-listed shares. The market's reaction to the decision affirms that investors value how U.S. securities laws apply an element of the "bonding" hypothesis as a motive for international cross-listings.
- Subjects
UNITED States; FRAUD lawsuits; NATIONAL Australia Bank Ltd.; MORRISON, Robert; STOCK exchanges; FOREIGN investments; ACTIONS &; defenses (Law)
- Publication
Review of Corporate Finance Studies, 2018, Vol 7, Issue 1, p101
- ISSN
2046-9128
- Publication type
Article
- DOI
10.1093/rcfs/cfx021