Impact of Cross-Border Listing on Stock Liquidity: Evidence from East African Community

Abstract

Abstract:The purpose of this study was to examine the impact of cross listing on share liquidity for cross listed firms within East African Community, with the domestic market being the Nairobi Securities Exchange. A census was carried out for Kenyan listed firms that have cross-listed into other EAC exchanges in the last five years. Secondary data was collected from the NSE data base. Stock traded volume and turnover were used as proxy measures of stock liquidity. Their means were calculated pre-and post-cross-listing and tested for significance using a paired

The determinants of dual listing decision of firms from ASEAN-5

“…This suggests that the lower the firms' stock liquidity, the higher their tendency to pursue a dual listing. This is in line with previous studies that showed firms with low liquidity experience an improvement in the stock liquidity after listing abroad (for example, see (Ayyagari & Doidge, 2010;King & Mittoo, 2007;Makau et al, 2015).…”

“…Currently, countries around the world are forming alliances to overcome the barriers of capital movement, which is found to enhance the competition among investors and market makers, as well as provide wider financial innovations to the investors in their home country (Kariuki, 2015;Kipkemoi, 2013;Makau et al, 2015;Wanjiru, 2013). The integration of capital markets enhances the competition between stock markets and investors in trading in foreign securities (Kariuki, 2015;Yao et al, 2018).…”

“…Likewise, firms opt to have a dual listing to enhance their prestige or reputation which provides valuable outcomes for existing and potential stakeholders (Makau et al, 2015). Studies have shown that investors are aware of firms' reputations and they consider it an important factor in their investment decision (Burns et al, 2007).…”

“…The second approach is by trading in markets that do not require additional obligations i.e. through Depository Receipt (DR) 1 or Over The Counter (OTC) (Ghadhab, 2016;Kariuki, 2015;Makau et al, 2015). Historically, the first firm to be cross-listed in the United States was on 20 December 1928, originating from Canada listed on the New York Stock Exchange (NYSE) (Karolyi, 1997).…”

“…Listing in major markets found enables firms from developing countries to enhance their growth opportunity and overcome these obstacles (Ghadhab & M'rad, 2018;Singh, 2009;You et al, 2013). Moreover, firms are found to engage in an overseas listing to enhance their information disclosure, compete with other investors, and attain wider financial innovation for local and foreign investors (Kipkemoi, 2013;Makau et al, 2015;Wanjiru, 2013). Firms also aim to increase their equity capital, operations, financial performance, and firm value through an overseas listing.…”