Question

Explain the main advantage and disadvantage for foreign companies cross-listing shares in the U.S. considering the required disclosure.

Answer 1

There are various advantage of cross listing of shares of a foreign company in United States-

1. Wider shareholders base-there would be wider shareholders base for the the foreign company as there would be new share holders added in the foreign market.

2. Liquidity-there would be a large increase in the total trading volume of the company and it will enhance the liquidity of the company.

3.it will also provide with the capital needs and the growth opportunity for the foreign company to grow beyond their home market.

4.cross listing in United State will also provide a market integration which would be Global in nature and which will be affected by the direct and indirect barriers.

there are various disadvantages associated with listing a company in United States through cross listing-

1.there would be a large number of regulations to be followed by these companies to get listed in the United States.

2.high cost including direct one time cost surch as registration and then uniform cost search as reporting and disclosure requirement costs are required to be paid.

3.it would also lead to reduction in the controlling stake of the promoter while getting listed into the new market.