2004-01 FIN: Industry-relative Performance of European Listings in the U.S. (Working Paper)
Bancel, F., Kalimipalli, M., & Mittoo, U.R.
published: 2004 | Research publication | Working Paper - Finance
ABSTRACT This paper examines the long-run stock price performance of European listings in the U.S. relative to their European and U.S. industry peers. Our analysis reveals some interesting findings. First, firms list in the U.S. after a strong industry-adjusted price performance, consistent with evidence in previous studies. This strong performance continues during the next three years following the listing. A typical firm outperforms its industry benchmark by about 2.8 percent per month during three years after listing. Second, there is significant cross-sectional variation in the post-listing performance across firms, industries and countries. Firms from U.K. have much higher price performance compared to those from other countries. A similar pattern is observed across industries. Financial firms reveal the strongest post-listing return performance outperforming their industry peers by over 200 percent while technology stocks underperform relative to their peers. Finally, there are significant differences in pre- and post- 1990 U.S. Listings. The pre-1990 listings have much stronger performance relative to the post-1990 listings. However, there is also significant cross-sectional variation across post-1990 listed stocks. Further, over half of the post-1990 listings are characterized by initial public offerings; such listings comprise less than one-fourth of the pre-1990 sample. We propose to examine these differences more fully in future research.
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