nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2006‒09‒16
one paper chosen by
Alexander Harin
Modern University for the Humanities

  1. Look at Me Now: What Attracts U.S. Shareholders? By John Ammer; Sara B. Holland; David C. Smith; Francis E. Warnock

  1. By: John Ammer; Sara B. Holland; David C. Smith; Francis E. Warnock
    Abstract: This paper investigates the underlying determinants of home bias using a comprehensive data set on U.S. investors’ aggregate holdings of every foreign stock. Among those foreign stocks that are not listed on U.S. exchanges, which account for more than 96 percent of our usable data sample, we find that U.S. investors prefer firms with characteristics associated with greater information transparency, such as stronger home-country accounting standards. We document that a U.S. cross-listing is economically important, as U.S. ownership of a foreign firm roughly doubles upon cross-listing in the United States. We explore the cross-sectional variation in this “cross-listing effect†and find that the increase in U.S. investment is greatest for firms that are from weak accounting backgrounds and are otherwise informationally opaque, suggesting that the key effect of cross-listing is improvements in disclosure that are valued by U.S. investors. By contrast, cross-listing does not increase the appeal of stocks from countries with weak shareholder rights, suggesting that U.S. cross-listing cannot substitute for legal protections in the home country. Nor does the cross-listing effect appear to be driven simply by increased “familiarity†with the stock or lowered cross-border transactions costs.
    JEL: G11 G15 G3 M4
    Date: 2006–08

This nep-acc issue is ©2006 by Alexander Harin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.