frequency. During the recent year of market turbulence
(end of 2008 through November of 2009), gross capital
flows retreated to levels seen at the beginning of the decade.
This decline is more likely attributed to a manifestation
of large stock and bond market valuation drops
rather than any real changes in cross-border investing
behavior of US or global residents.
Equities have been an important component of this
rapid expansion of cross-border capital flows. During recent
years, domestic and foreign equities constituted
about 35% of total gross capital flows involving US residents,
a figure that is more than double the equivalent
fraction seen in the 1970s and 1980s. An important factor
in facilitating this globalization in equity markets, in particular,
has been market deregulation around the world
that has made it easier to own and trade foreign securities.
But even more importantly, tremendous competition has
arisen among major stock exchanges around the world to
attract overseas companies to cross-list and trade their
home-market shares on these new markets.
Cross-listing – also referred to as ‘dual listing,’ ‘international
listing,’ or ‘interlisting’ – is usually a strategic