Title: The effects of regional cross listing on firm value and financial performance: drawing lessons for Lesotho

Authors: Moeti Damane

Addresses: Research Department, Studies and Analysis Division, Central Bank of Lesotho, Corner Moshoeshoe and Airport Roads, P.O. Box 1184, Maseru 100, Lesotho

Abstract: This research determines the effects of regional cross listing on firm value and financial performance and draws policy lessons for Lesotho. Using event study methodology, financial ratio analysis and a regional case study of two Sub-Saharan African firms that cross listed on the Johannesburg Stock Exchange in 2015 and 2016, the results of the study reveal that cross listing leads to increased firm liquidity coupled with positive and statistically significant abnormal returns. These findings confirm the legal bonding theory, the signalling theory, the investor recognition theory and the liquidity theory. It is recommended that the empirical findings of this study be used by authorities to draw locally incorporated firms' attention to the potential benefits of cross listing. This should be done in conjunction with initiatives that identify and unlock any bottlenecks that act as deterrents for company listing on the Maseru Securities Market.

Keywords: securities exchange; cross listing; financial ratios; market segmentation; event study methodology.

DOI: 10.1504/AJAAF.2019.099155

African Journal of Accounting, Auditing and Finance, 2019 Vol.6 No.3, pp.201 - 235

Received: 13 Sep 2018
Accepted: 02 Nov 2018
Published online: 16 Apr 2019 *

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