Corporate Governance

The Role of Stock Exchanges in Corporate Governance: The Source of the Cross-Listing Premium (Part 7)

By J. Robert Brown

We are discussing The Role of Stock Exchanges in Corporate Governance, a report issued by the OECD.  The table on p. 11 of the report also notes whether the various exchanges impose mandatory disclosure requirements on listed companies.  Of course, in the US, Section 12(b) requires exchange traded companies to conform to the reporting regime under Section 13. 

Of the numerous stock exchanges listed, only three had mandatory disclosure obligations:  NYSE, Nasdaq and Toronto.  Tokyo was listed as a hybrid, with the report noting that sometimes regulators may impose mandatory disclosure requirements.  Otherwise, all of the other exchanges were some version of "comply or explain," including the LSE. 

In short, there is no guarantee for most listed companies that the disclosure regime will be any better than for non-listed companies.  Perhaps this explains why there is such a significant cross-listing premium in the United States.  Investors in the home jurisdiction are more willing to invest in businesses subject to strict transparency requirements.  See Has New York Become Less Competitive in Global Markets? Evaluating Foreign Listing Choices over Time.

Full post as published by The Race to the Bottom on September 17, 2009 (boomark / email).