Cross-listing and the alignment between short and long-run performance

• We investigate short and long-run performance for cross-listed firms. • Non-American firms cross-listed in the US exhibit higher initial price reaction. • This misalignment is more pronounced with less effective local governance standards. • The changes in the U.S regulatory environment have no diminishing effect on cross-listing economic benefits. • Important short-run price reactions are detected in crisis times. This paper examines the alignment between initial price reaction and post-cross-listing performance for non-American firms cross-listed in the U.S. Using an event study methodology, we show that, while cross-listed firms exhibit long-term performance, short-term valuation gain is more important. We also find a significant difference between short and long-term price reactions, explained by legal investor protection considerations. Additional analysis shows that the change in the U.S. regulatory environment has no diminishing effect on cross-listing economic benefits. We also show more important short-run price reactions in crisis time, leading to more significant misalignment between short and long-term performance. Our results are robust to several control firm and country characteristics.