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Discussion of ADRs, Analysts, and Accuracy: Does Cross‐Listing in the United States Improve a Firm's Information Environment and Increase Market Value?

Discussion of ADRs, Analysts, and Accuracy: Does Cross‐Listing in the United States Improve a... Lang, Lins, and Miller (2002) investigate the relation between cross‐listing in the United States and information intermediation by analysts. The results suggest that cross‐listing in the United States increases analyst following and forecast accuracy and that both variables are associated with Tobin's Q. These findings are interesting and advance the cross‐listing literature in several ways. This discussion raises two issues. First, I highlight that the sources of cross‐listing effects are not obvious and are difficult to disentangle. To illustrate this point, I replicate the analysis using cross‐listed Canadian firms, for which mandated disclosures are held constant. Thus, if disclosure effects are important for documented cross‐listing effects, I expect to find no relation in the Canadian sample. The findings for forecast accuracy are consistent with this hypothesis. However, analyst following continues to be significantly higher for cross‐listed Canadian firms. These findings suggest that the sources of cross‐listing effects differ for analyst coverage and forecast accuracy. Second, I discuss the link between analyst variables, firm value, and cost of capital. As they are only tenuously related, I draw attention to some unresolved questions and areas for future research. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting Research Wiley

Discussion of ADRs, Analysts, and Accuracy: Does Cross‐Listing in the United States Improve a Firm's Information Environment and Increase Market Value?

Leuz, Christian
Journal of Accounting Research , Volume 41 (2) – May 1, 2003
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References (22)

Publisher
Wiley
Copyright
Copyright © 2003 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0021-8456
eISSN
1475-679X
DOI
10.1111/1475-679X.00107
Publisher site
See Article on Publisher Site

Abstract

Lang, Lins, and Miller (2002) investigate the relation between cross‐listing in the United States and information intermediation by analysts. The results suggest that cross‐listing in the United States increases analyst following and forecast accuracy and that both variables are associated with Tobin's Q. These findings are interesting and advance the cross‐listing literature in several ways. This discussion raises two issues. First, I highlight that the sources of cross‐listing effects are not obvious and are difficult to disentangle. To illustrate this point, I replicate the analysis using cross‐listed Canadian firms, for which mandated disclosures are held constant. Thus, if disclosure effects are important for documented cross‐listing effects, I expect to find no relation in the Canadian sample. The findings for forecast accuracy are consistent with this hypothesis. However, analyst following continues to be significantly higher for cross‐listed Canadian firms. These findings suggest that the sources of cross‐listing effects differ for analyst coverage and forecast accuracy. Second, I discuss the link between analyst variables, firm value, and cost of capital. As they are only tenuously related, I draw attention to some unresolved questions and areas for future research.

Journal

Journal of Accounting Research – Wiley

Published: May 1, 2003

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