U.S. International Equity Investment

Abstract

Using a comprehensive data set of all U.S. investment in foreign equities, we find that the single most important determinant of the amount of U.S. investment a foreign firm receives is whether the firm cross-lists on a U.S. exchange. Correcting for selection biases, cross-listing leads to a doubling (or more) in U.S. investment, an impact greater than all other factors combined. Much of this increased U.S. investment is purchased in the foreign market, implying that the cross-listing effect reflects something more fundamental about a firm than easier acquisition of its securities. We also demonstrate that cross-listing is an important determinant of U.S. international investment at the country level and describe easy-to-implement methods for including a cross-listing variable as an endogenous control.