Abstract
Using a sample that provides unprecedented detail on foreign listings, new listings, and delistings for 29 exchanges in 24 countries starting from the early eighties, we document large waves in exchanges’ ability to attract foreign companies and a tendency of listings to concentrate in the U.S. and the U.K. We highlight the following determinants of these tendencies. First, new regulations aiming to improve investor protection bring more foreign listings to the exchange, but stricter disclosure requirements discourage foreign listings. Second, as investor protection improves in the country of origin, firms become less likely to list in countries with weak investor protection, but more likely to list in the countries with strongest investor protection and, in particular, in the U.K. and the U.S. This can explain why over the last 20 years the U.S. and U.K. exchanges have gained foreign listings at the expense of smaller exchanges. Finally, foreign listing waves appear to be related to the exchange market valuation in the same way as domestic equity issues do. We show evidence that this is partially due to firms’ attempts to time the market.