TY - JOUR
T1 - Disclosure requirements and stock exchange listing choice in an international context
AU - Huddart, Steven
AU - Hughes, John S.
AU - Brunnermeier, Markus
PY - 1999/1
Y1 - 1999/1
N2 - 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 also are modeled.
AB - 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 also are modeled.
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U2 - 10.1016/S0165-4101(98)00034-2
DO - 10.1016/S0165-4101(98)00034-2
M3 - Article
AN - SCOPUS:0001244527
SN - 0165-4101
VL - 26
SP - 237
EP - 269
JO - Journal of Accounting and Economics
JF - Journal of Accounting and Economics
IS - 1-3
ER -