Market reaction to cross-listing of Canadian firm's [sic] on U.S. stock exchanges

Abstract

This paper mainly tests the Canadian market reaction to Canadian firms being cross listed on U.S. stock exchanges. We tested the existence of abnormal returns based on cumulative abnormal returns using 11-day and 21-day event window, and bootstrap testing during the period 2000-2014. The Canadian market presents a significant positive mean cumulative return of 0.67% for the 11-day event window and 1.2% for 21-day window at the 5% significant level. In addition, cross-listing of Canadian firms on U.S. stock exchanges is a value-enhancing activity. The results confirm that security prices do adjust quickly to cross-listing announcements. In summary, Canadian firms cross-listing on U.S. stock exchanges yield a positive market reaction and an increase in shareholders’ wealth.