The host-market valuation effect of foreign company cross-listings - The case of the Hong Kong market

Abstract

This paper studies the valuation effect of time-varying and the difference between different markets of overseas companies cross-listing on the host market. Using the data of the Hong Kong market from 1991 to 2018, we adopt the event study method and multiple regression model to analyse the short- and long-term valuation effect, respectively. Furthermore, two-stage least squares (2SLS) regression are utilized to address the endogeneity. We find that the valuation of foreign company listings on the host market change with the duration and have a significant short-term positive spillover effect. However, the long-term spillover effect is related to the company's home market. This study provides new insights into foreign cross-listing company valuation, offering a few implications for the establishment of a Chinese International Board.