Finance professors and alum cross-listing study
receiving worldwide media attention

A new study by Fisher finance professors and an alumnus that indicates American stock markets are still attracting foreign corporations, since the introduction of the Sarbanes-Oxley Act has created a media stir in an already heated debate.

The research, co-authored by professors Andrew Karolyi and René Stulz along with Fisher alum and University of Toronto faculty member Craig Doidge, was first reported by The Wall Street Journal on April 27. The study determined American markets were not hampered by the regulatory restrictions as they battled London markets for foreign listings. They attributed the decline to a reduction in the number of foreign companies that fit the traditional profile for American exchange listings.

In the early 1990s, Karolyi, Stulz and Doidge were among the first researchers to study the value-added foreign corporations’ gain by listing in the U.S. As leading experts on the topic, Stulz and Karolyi have received on-going media attention for their research. In the April 27 article, the Wall Street Journal credited the researchers as “pioneers” and “authorities on foreign-company listing decisions.”

The response from the initial Wall Street Journal article led to a flurry of other inquiries, including interviews on CNBC and with British press. Another factor in the frenzied interest was the timing of the new study’s publication, which came at a critical point during policy discussions. The Securities and Exchange Commission is moving to revise Sarbanes-Oxley’s internal-audit guidelines to make it easier for foreign corporations to meet the U.S. accounting standards.

“There is a change in public policy at stake in all of this,” Karolyi, the Charles R. Webb Designated Professor of Finance, said. “Ultimately what we have bucks most of the views out there on Sarbanes-Oxley. What our research showed is we haven’t seen much of a natural impact.”

The study found London exchanges don’t offer the same premium because the country’s securities regulations differ between domestic and foreign corporations, Stulz, the Everett D. Reese Chair of Banking and Monetary Economics, said. Stringent legislation only exists for companies based within the United Kingdom, while procedures for foreign operations don’t offer the same protection as U.S. laws.

London’s AIM stock exchange has seen a spike in new listings, Stulz said. According to the professor, those corporations are smaller and don’t fit the profile for the traditional New York and London markets.

“If you look at the world from that perspective, the U.S. has an advantage over the U.K. for those firms that seek to improve the protection of the minority shareholders,” Stulz said. “Some firms want to do that because it allows them to raise capital on better terms.”

The researchers examined thousands of companies listed on one or both markets in the United States or London from 1990 to 2005. The article is available for download on the Fisher page at