Industry Structure and Impact of Cross-Listings

This paper examines how product market competition is related to the impacts of cross-listing events for both the listing firms and their domestic non-cross-listed rivals. I find that issuing firms enjoy higher abnormal returns and greater subsequent market-share increases when they share more investment opportunities with their domestic rivals. On the other hand, cross-listings have negative spillover effects on rivals that do not cross-list. This negative spillover effect is stronger for firms with similar operations to those of the cross-listing firms than it is for more disparate firms, in that the higher the interdependence of growth opportunities with the issuing firm, the higher the predation risk the non-issuing rival will be exposed to. I find the cross-sectional differences in the change of market shares and cost of capital for those rival firms. In addition, ex ante uncertainty about firm value amplifies the positive effects on issuing firms, but exacerbates the negative spillover effects on rival firms. My results are consistent with both bonding and signaling hypotheses about cross-listings and add explanations for the own and spillover impacts from the perspective of industry competition