The listing and delisting of German firms on NYSE and NASDAQ: Were there any benefits?

► We investigate the U.S. listing and delisting decisions of German companies. ► Market segmentation and bonding theories suggest positive valuation effects. ► But we find no evidence for cost of capital reductions or increased market values. ► Rule 12h-6 prompted 13 of the 18 cross listed companies to delist from U.S. markets. ► We examine the reasons for delisting and provide a case by case analysis for the firms still listed. From 1990 through 2005 18 German firms listed their shares in the U.S. in the hopes of increasing their market values and lowering their cost of capital. We examine whether these anticipated benefits materialized and find the companies obtained no valuation benefits from their listings. The absence of valuation benefits may explain why 13 firms have delisted since 2006 once Rule 12h-6 was adopted that enabled firms to delist without having to continue to file reports with the SEC. Other factors were the passage of SOX, changes in German corporate governance laws and the emergence of alternative trading platforms.