Disclosure requirements and stock exchange listing choice in an international context

Huddart, Steven, Hughes, John and Brunnermeier, Markus (1998) Disclosure requirements and stock exchange listing choice in an international context. Financial Markets Group Discussion Papers (282). Financial Markets Group, The London School of Economics and Political Science, London, UK.

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Abstract

We use a rational expectations model to examine how public disclosure requirements affect listing decisions by rent-seeking corporate insiders, and allocation decisions by liquidity traders seeking to minimize trading costs. We find that exchanges competing for trading volume engage in a "race for the top" whereunder disclosure requirements increase and trading costs fall. This result is robust to diversification incentives of risk-averse liquidity traders, institutional impediments that restrict the flow of liquidity, and listing costs. Under certain conditions, unrestricted liquidity flows to low disclosure exchanges. The consequences of cross-listing and harmonization of disclosure standards are modeled.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://www.fmg.ac.uk/
Additional Information:	© 1998 The Authors
Divisions:	Financial Markets Group
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HG Finance
JEL classification:	G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets M - Business Administration and Business Economics; Marketing; Accounting > M4 - Accounting and Auditing > M41 - Accounting K - Law and Economics > K2 - Regulation and Business Law > K22 - Corporation and Securities Law
Date Deposited:	05 Jun 2023 12:24
Last Modified:	16 Sep 2023 00:03
URI:	http://eprints.lse.ac.uk/id/eprint/119158

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