Market Reaction to OTCQX International Market Listing: the role of the information environment

• In Event: Stock Markets I

Abstract

This study examines the market reaction to cross listing on the OTCQX International market, a newly developed premium Over-The-Counter (OTC) international market. Using data during 2007-2015, we find that the cumulative average abnormal returns around cross listing on the OTCQX International market are generally positive and statistically significant. We also find that firms with voluntary filing to the SEC, better capital access, and a higher average return on equity over the past five years are all associated with higher abnormal returns. Further analysis shows that OTCQX international firms are larger and less leveraged than their U.S. counterparts; they also outperform their U.S. counterparts. Overall, we provide evidence indicating that listing on a more stringent OTC market increases the market value of foreign firms.

Author

• Myung Sub (Martin) Kim, Florida International University