When does internationalization enhance the development of domestic stock markets?

    Authors

    K. Hargis;P. Ramanlal

    Comments

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    Abbreviated Journal Title

    J. Financ. Intermed.

    Keywords

    LIQUIDITY; CONSOLIDATION; FRAGMENTATION; TRANSPARENCY; INVESTMENT; SECURITY; RISK; Business, Finance

    Abstract

    We develop a model to examine the impact of international cross-listing on domestic market liquidity and trading volume to determine when domestic market development is likely to follow. Greater information transparency between markets increases domestic market liquidity and volume, resulting in market development. Conversely, post-listing order flow migration away from the domestic market reduces its liquidity and volume, resulting in retardation. The net impact is positive and greater when market professionals acquire rather than reveal information, for smaller previously restricted markets, and for cross-listings in larger more transparent markets that have a greater potential to expand the shareholder base. Journal of Economic Literature Classification Numbers: D44, D82, F36, G15. (C) 1998 Academic Press.

    Journal Title

    Journal of Financial Intermediation

    Volume

    7

    Issue/Number

    3

    Publication Date

    1-1-1998

    Document Type

    Article

    Language

    English

    First Page

    263

    Last Page

    292

    WOS Identifier

    WOS:000077360900003

    ISSN

    1042-9573

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