Managerial Perceptions of the Net Benefits of Foreign Listing: Canadian Evidence

Abstract

This study provides some insights into managerial perceptions of the costs, benefits, and net benefits of foreign listing through a survey of Canadian firms that have listed their securities on the foreign exchanges in the U.S. and U.K. Access to foreign capital markets and increased stock marketability are perceived to be the major benefits. The SEC reporting and compliance requirements are cited as the major costs of foreign listings. Overall, benefits are perceived to outweigh costs although not significandy. Managerial perceptions of positive net benefits are strongly linked to the levels of trading volume in their firm's stock on foreign exchanges. This study is useful for managers contemplating foreign listings. Our findings indicate that the listing decision requires careful scrutiny in terms of potential costs and benefits which may depend on many firm specific factors. Firms conducting most of their business abroad and issuing a greater percentage of equity abroad are likely to have a greater appeal for foreign investors irrespective of their size and industry. While multiple listings on foreign exchanges may not imply higher foreign trading volumes, fewer domestic exchange listings are associated with higher foreign trading volumes.