ADRs, Analysts, and Accuracy: Does Cross Listing in the United States Improve a Firm's Information Environment and Increase Market Value?

2003/04/04 by Mark H. Lang, Karl V. Lins, Darius P. Miller · 1,172 citations
Business, Management and Accounting · Economics, Econometrics and Finance · Mathematics · #Accounting #Auditing, Earnings Management, Governance #Business #Corporate Finance and Governance #Cross listing #Econometrics #Economics #Enterprise value #Finance #Financial Markets and Investment Strategies #Forecast error #Listing (finance) #Mathematics #Statistics #Value (mathematics)

paper · doi:10.1111/1475-679x.00106

published in Journal of Accounting Research 41(2), 317-345 (Wiley)

openalex publication_date 2003/04/04 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/25

Abstract

Abstract This paper investigates the relation between cross listing in the United States and the information environment of non‐U.S. firms. We find that firms that cross list on U.S. exchanges have greater analyst coverage and increased forecast accuracy than firms that are not cross listed. A time‐series analysis shows that a change in analyst coverage and forecast accuracy occurs around cross listing. We also document that firms that have more analyst coverage and higher forecast accuracy have higher valuations. Furthermore, the change in firm value around cross listing is correlated with changes in analyst following and forecast accuracy, suggesting that cross listing enhances firm value through its effect on the firm's information environment. Our findings support the hypothesis that cross‐listed firms have better information environments, which are associated with higher market valuations.

Citations

• Using analysts' forecasts to measure properties of analysts' information environment.
• Corporate Disclosure Policy and Analyst Behavior.
• Disclosure level and the cost of equity capital.
• Sample Selection Bias as a Specification Error
• Fundamental Information Analysis
• The Economic Consequences of Increased Disclosure

Cited by

• Disclosure Practices of Foreign Companies Interacting with U.S. Markets
• Analyst Following and Forecast Accuracy After Mandated IFRS Adoptions
• The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research
• Transparency, Liquidity, and Valuation: International Evidence on When Transparency Matters Most
• The Valuation Impact of SEC Enforcement Actions on Nontarget Foreign Firms
• What drives corporate social performance? The role of nation-level institutions
• Accounting Conservatism and Stock Price Crash Risk: Firm‐level Evidence
• Democratizing corporate governance: How retail investors’ ESG attention reduces ESG-washing
• Economic policy uncertainty and incentive to smooth earnings
• Disclosure Practices of Foreign Companies Interacting with U.S. Markets
• The Influence of Cognitive Biases and Financial Factors on Forecast Accuracy of Analysts. [europepmc]
• Does Whipping Tournament Incentives Spur CSR Performance? An Empirical Evidence From Chinese Sub-national Institutional Contingencies. [europepmc]
• Does competitive position matter: Investigating the impact of information risk on COE and corporate investment. [europepmc]

Related

• The Influence of Analysts, Institutional Investors, and Insiders on the Incorporation of Market, Industry, and Firm-Specific Information into Stock Prices
• Does Greater Firm‐Specific Return Variation Mean More or Less Informed Stock Pricing?
• Analysts’ reputational concerns, self-censoring, and the international dispersion effect
• Do Investors Respond to Analysts' Forecast Revisions as if Forecast Accuracy Is All That Matters?
• How Buyers Cope with Uncertainty when Acquiring Firms in Knowledge-Intensive Industries: Caveat Emptor