A greater global integration of capital markets became apparent for various reasons –

●      First, investors understood the good effects of international trade.

●      Second, the prominent capital markets got more liberalized through the elimination of fixed trading commissions.

●      Third, internet and information and communication technology facilitated efficient and fair trading in international stocks.

●      Fourth, the MNCs understood the advantages of sourcing new capital internationally.

Cross-listing

Cross-listing refers to having the shares listed on one or more foreign exchanges. In particular, MNCs do this generally, but non-MNCs also cross-list. A firm may decide to cross-list its shares for the following reasons −

●      Cross-listing provides a way to expand the investor’s base, thus potentially increasing its demand in a new market.

●      Cross-listing offers recognition of the company in a new capital market, thus allowing the firm to source new equity or debt capital from local investors.

●      Cross-listing offers more investors. International portfolio diversification is possible for investors when they trade on their own stock exchange.

●      Cross-listing may be seen as a signal to investors that improved corporate governance is imminent.

●      Cross-listing diminishes the probability of a hostile takeover of the firm via the broader investor base formed for the firm’s shares.