The impact of cross-border listing on stock returns evidence from the Nairobi Securities Exchange
This paper examined the impact of cross-border listing on stock returns. The objective of the study was to establish the impact of cross-border listing on stock returns in the Nairobi Securities Exchange. This paper further examined the impact of cross-border listing on risk. The period covered was between 2001and 2011. The sample consisted of seven Kenyan firms which had cross-listed in the neighbouring stock exchanges between 2001and 2011. Event study methodology was used to analyze the impact of cross-border listing on stock returns. The study finds positive average abnormal returns around the date of the cross-border listing. The study also finds insignificant positive cumulative average abnormal returns around the cross-border listing date. The impact of cross-border listing on risk was found to be varied across the different sampled stocks. There are several other benefits associated with cross-border listing other than an increase in stock returns hence it should be encouraged in the region. Therefore, policy makers for both the country of primary listing (home country) and secondary listing (host country) need to come up with the right policies to encourage cross-border listing in the region. Some of these policies include: provision of incentives to companies wishing to cross-list, introduction of policy measures that encourage shareholder protection and transparency, improvement of the regional flow of information and coordination and communication infrastructure to facilitate cross-listings and harmonization of listing rules, accounting laws and disclosure requirements across the region.