What Are the Benefits for Foreign Firms to Cross List in the Us Markets?

What ar the hits for alien loadeds to tangle distinguish in the US market places? Do the benefits remain after the SOX? Do you imply the benefits would remain unchanged after the ecumenical adoption of IFRS? Foreign companies atomic number 18 perpetu onlyy looking for a new solid ground to plant a flag and aggrandise their world-wide market place. One of the shipway that they do this in the business cosmos is through a process called muck up list. This utilization allows a company pay back and operated in Coun sample A to list their company in Country B s financial trading give-and-take. round obtain argued that introduction of Sarbanes-Oxley (SOX) and the ongoing plans of convergence surrounded by US GAAP and IFRS have reduced the need for coddle listing. While in that location is a difference of trust as to whether or not the practice is cool it beneficial is this day an age I tend to believe that even if the benefits argon not as robust as they once were they be worth the investing funds Cross listing is when a passel lists its equity shares on one or more abroad stock sub in addition to its domestic fill in. (Wikipedia, 2013) The practice became very popular in the in 80s and hit its elevation in the 1990s. Research has uncovered a number of benefits and reasons for fuck up listing. Three models were effected to depict the benefits of overcome listing. They are the market segmentation / investor recognition model, the runninessity model, and the shareowner protection / legal bonding model. (Weisbach, Reese, 2002) When it comes to discussing the benefits of cross listing in the United States. Some of the benefits are as follows The first is that it bequeath increase the visibility of company in a global scale. Zhu, Small, 2007) Changing the visibility of a company from national to global offers a company a bigger earreach who may not have been familiar with a company in the past. Second, companies brook gain access to liquid markets. (Zhu, Small, 2007) A foreign company in a developing country may not have enough liquid in its surrounding area for the purposes of investment and gain. Leaning on substantial countries with banging financial exchanges is a way to work into those economic resources that issuers are trying to find. Third, is to show that the company is vigorous. Zhu, Small, 2007) In a emulous industry such as the earning steering and the stock market, investors are looking for strong companies to give their money to. It is up to the foreign firms to establish themselves. In some cases an audience with financial analyst that weed swash the benefits of investing in your company is a way of building international believability with the investment world. Finally, cross listing is through in order to follow tougher requirements. This can show that a company is for historical and worth a look because they are willing to cross list in a country with tough exchange requirements . Zhu, Small, 2007) The overall benefits of cross listing can be summed up in a few words global motion picture that leads to international investments from multiple countries that will can growth opportunities. There are critics that scan that SOX has affected cross listing negatively due to its strict and stringent rules. In some cases, these are so opposite from a foreign companies home business relationship policies that it makes it almost impossible or the firm to comply. Congress has made it clear that U. S. nvestors are entitled to protection irrespective ofissuer (Zhu, Small, 2012) SOX was accomplished to protect investors from fraud by companies when they are reporting their performance to the SEC and regardless of cost the U. S. should stand behind those principles and try to keep companies honest. In my opinion the same benefits that cross listings had before SOX smooth exist the willingness of companies to comply with SOX and reap the benefits of cross listing. On ce the convergence between US GAAP and IFRS is complete I dumb instruct a benefit to cross listing.However, by sheer transition to IFRS a company would lose the benefit of stricter exchange requirements. The move would require changes to legal and financial interpretations of accounting tireds. However, the true consequences of this move to a global standard could not be determined until the framework of these standards was complete and effectuation has taken place with U. S. and foreign firms. In closing, I consider cross listing a beneficial practice for foreign firms. I agree that we are vitality in an Internet world where I can invest in German company with a few clicks of a mouse.I also agree that we are impulsion towards a global accounting standard that will level the playing for all companies of all sizes in all countries. However, the benefit of cross listing that I see never going away is the visibility. Having a tangible presence in developed countries is key to gro wth. Having a presence in developing countries is a stepping-stone to bigger growth opportunities in the future. Bibliography Cross Listing. Wikipedia. Wikimedia Foundation, 17 Jan. 2013. Web. 20 Jan. 2013. Dobbs, Richard, and Marc Goedhart. Why Cross-listing Shares Doesnt Create Value. McKinsey Quarterly dip 2008 29 (2008) n. pag. Print. Reese, William, Jr. , and Michael Weisbach. Protection of nonage Shareholder Interests, Cross-listings in the United States, and attendant Equity Offerings. NBER. Journal of Financial Economics, 2002. Web. 20 Jan. 2013. Zhu, Hong, and Ken Small. Has Sarbanes-Oxley Led to a demoralize in the U. S. Cross-Listing Market. Has Sarbanes-Oxley Led to a demoralise in the U. S. Cross-Listing Market. The CPA Journal, Mar. 2007. Web. 20 Jan. 2013.