Define advantages for a firm to cross list its equity shares, Financial Management

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Discuss any advantages you can think of for a company to

(1) cross-list its equity shares on much more than one national exchange,

(2) To source new equity capital from foreign investors also domestic investors.

Answer:  A MNC which has a product market presence or manufacturing services in various countries may cross-list its shares on the exchanges of these similar countries as there is typically investor demand for the shares of companies which are termed within a country.  In addition, a company may cross-list its shares on foreign exchanges to broaden its investor base and hence to increase the demand for the stock.  An increase in demand will usually increase the stock price and enhance the market liquidity.A broader investor base may as well mitigate the option of a hostile takeover. In addition, cross-listing a company’s shares establishes name recognition and so facilitates sourcing new equity capital in these foreign capital markets.


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